Retiring in Paradise. . . and Chico

The Chico / Paradise area has long been a popular retirement choice, based in part on our wonderful summer weather (‘warmer weather’ was identified in a 1996 Del Webb survey as the primary criteria in choosing a retirement location). Add to that the cultural opportunities provided by a major California University in Chico and quality hospitals and medical care in both communities and it becomes clear why retirees from the bay area and southern California have found the region to be a good choice to spend their golden years.

But with nest-eggs reduced or eliminated by the financial collapse of the past two years seniors are re-prioritizing when considering a retirement destination. According to an article on MarketWatch.com as reported by RISMEDIA seniors are making different housing and location choices in the new environment. Will the Chico/Paradise area still hold it’s appeal based on these new criteria?

Those 55+ still plan on moving in retirement, between 30-40% according to one survey, but ‘cost of living’ has replaced ‘warmer climate’ as the number one quality that seniors are looking for. To most this means downsizing, and homes that come equipped with sensible, cost-efficient amenities that will make living both comfortable and budget-conscious. According to a survey by the National Association of Home Builders (NAHB), important features currently on the minds of those approaching retirement are:

-Bathroom aids such as grab bars

-Kitchen aids

-Light home-repair services

-Outdoor maintenance services

-An entrance without steps

-Accessible public transportation

-Wider doorways

-Nonslip flooring

A lot of the more popular features in new homes these days don’t appeal all that much to older buyers:
-Island work areas-Separate showers

-Private toilet compartments

-Sun rooms

-Woodburning fireplaces

-Exercise rooms

Retirees want technology but not flash – they want security systems, energy management, structured wiring and lighting controls, but they don’t want to spend extra for home theaters, distributed audio or home automation. “These older buyers are frugal, probably on a fixed income and so expensive tech items are not that big on their lists,” said Rose Quint, the NAHB assistant vice president for survey research.

Will Chico and Paradise continue to be Meccas of retirement? We still have the desirable weather – hot summers, mild winters and large number of cloudless days. Our home prices are well below those of California’s major metro areas. We also have a reasonable supply of senior housing and assisted living facilities, but do we have enough? Whether the retirees will continue to come depends on how well local builders prepare in the near term with sensible and affordable homes and condominiums.

Short Sales May Actually Start Becoming Short!

Many of my posts have mentioned and discussed short-sales, that most inappropriately named process of selling a home that is in trouble but not yet foreclosed upon. Misnamed because short sales generally take anywhere from about 90 days on the quick side to over a year for longish transactions. The process is rife with pitfalls: competitive offers, appraisal problems, lender mistakes, lender inaccuracies, and outright lender lies!

Adding to it’s list of available homeowner assistance programs, the Obama administration has unveiled it’s new Home Affordable Foreclosure Alternative Program (HAFA is a smaller mouthful!). HAFA provides a road map and tools to a short-sale, for borrowers who are unable to satisfactorily work out there mortgage problems and are facing foreclosure. The program should streamline the complicated and unsavory process and will hopefully lead to fewer foreclosures.

Incentives for lenders to participate is one of the ways that HAFA should be able to get more buy-in. Borrowers too get a little cash: $1500 to defray moving costs – better than having the door hit you in the back as you move out! Standardized forms, procedures and timelines and preapproved short-sale terms will provide a higher level of confidence to potential buyers who, up until now had no guarantee that their accepted offer would ever actually end up in home ownership!

There are restrictions and limitations to which types of loans qualify, so if you are considering short-selling your home be sure to have your Chico area Realtor help you determine if you qualify.

Non-Stop Rain in Chico, The Real Estate Reality

After more than a week of steady rain, Chico area neighborhoods are pretty water-logged. Sometimes the culprit behind localized street flooding is a debris clogged storm-drain. Other times it’s indicative of a bigger drainage issue. Here’s what you need to know about disclosing flooding issues and buying a home on a street that has flooded.

As a seller you should disclose to a buyer any material fact, such as street flooding that could have an affect on your homes future value and safety. This is normally done by way of a form called a Transfer Disclosure Statement. The good news is that this disclosure can actually work to your benefit. Let’s say that a buyer ‘heard’ that your street had flooded. If you can truthfully explain that the flooding was an isolated occurrence, caused by a one-time event, it might dispel the buyers fears. If on the other hand the flooding turns out to be a recurring issue, you must disclose what you know. It’s always better to disclose up-front and let the buyer decide whether to proceed with the purchase than to hide a problem and be sued for it afterwards!

Your homes value may be affected by the incident depending on the seriousness of the problem. FEMA – the Federal Emergency Management Agency keeps flood maps of the entire country. These maps show which areas of your community are designated ‘flood zones’. There are different designations of flood zones, from those that flood regularly, to those that only flood based on the hypothetical ‘500 year event’ and areas that may be prone to flooding if a nearby dam breaks. The maps are quite detailed and will help you determine if your home is in danger of flooding. Your lender is savvy to these maps and will probably insist that you carry flood insurance if your home is within one of the zones.

Homes in flood zones are typically more difficult to sell and thus the value can be negatively affected by this designation. Buyers should be sure to have their Realtor require a Natural Hazard Disclosure that provides this information before they purchase. Once again, the extent of the problem will determine whether the homes value is negatively impacted. Some homes are actually more valuable and because they ARE in a flood zone, for example homes with incredible stream, river or ocean views, but it takes a brave (some would call it otherwise) and well-informed buyer to purchase this type of property!

The Lowest Home Prices Around?

Remember 2005? You could buy a house in January for $300,000 and sell it in December for nearly $400,000! Or you could list a house for $250,000, get ten offers and end up getting $300,000! Folks were so hungry to get in on the bonanza that Sacramentans were buying new homes in Gridley for $350,000 and commuting.

But when the real estate apocalypse hit, poor Gridley got the short end of the stick. Sacramentans went back to buying homes in Sac, Chicoans couldn’t afford the 30 mile commute and nobody from Gridley was buying $300,000-$500,000 homes in Gridley.

The beautiful new subdivisions nearly became ghost towns. But then foreclosures drove the prices on those homes so low that they again became attractive as the lowest priced newer homes around.

I’ve been showing Gridley area homes to a client for the last 3 weeks. He’s a young man whose father died and left him his home in San Jose. It took him two years to sell the home, but thanks to it being owned by his dad since the 1960’s the home that they had bought for $15,000 sold for $420,000, more than enough to buy him a clean newer home near where his extended family resides…in Gridley. He wants to keep the price under $200,000. How much home in Gridley will that buy at today’s prices?

We looked at probably 20 homes, primarily in Gridley but also in Live Oak and Oroville. The best prices on the nicest, newest homes, in the best neighborhoods seemed to be in Gridley. The homes were all built between 2002 and 2007. All were between approximately 1600 -2500 square feet. Amenities ranged from above average quality to custom tile, granite, stainless appliances and more. Some of these homes were owner occupied, the majority were either short-sales or bank-owned. Prices ranged from $167,000- $225,000! This equates to a price per foot ranging from around $89 to $113 per foot. As the old saying goes: “you can’t build ‘em for that”!

Compare this to the price per foot being paid in the middle of the last decade - $250 per foot was not uncommon in our area.

If you’re looking for a great deal in Butte County, you may want to reconsider Gridley!

Water Water Everywhere But Not a Drop To Drink*…

Given the torrential, El Nino induced downpour this week you wouldn’t think that water availability would be at the top of anyone’s mind, but in California water means power.

As such it also plays a major role in development, and that means home construction. As reported in this mornings Enterprise Record, during a Board of Supervisors review of the draft Butte County General Plan yesterday long-time Chico Developer Mo West raised the question of the “W” word during the public discourse. Mo it seems has seen the writing-on-the-wall and it’s not in ‘water’-color. Indeed, Mr. West appears to know his stuff, citing the fact that “80 percent of the water used in a community ends up going into the sewer system”. Mo knows…no water, no houses, but… “there are technologies that can purify that water and make it drinkable again”. So he encouraged the board to make sure that the topic of converting wastewater to drinking water was included in the plan.

Indeed, Butte County water now seems to have risen to a level of importance formerly seen in southern California and the Owens Valley. Butte Environmental Council has been at the forefront of battling for our underground water rights in recent years, fighting to make sure that our aquifer is not sold out from under us.

Are we ready to embrace ‘toilet-to-tap’ here in the land of sky blue waters? When locals see three creeks running through town, A major river five miles to the west, another to the south with a giant reservoir (Lake Oroville) attached to it…isn’t drinking recycled sludge a hard-sell?

I’m all for making the hard (gulp) switch that Mo suggests when the time comes, but for now how about this instead…WE keep OUR water and sell THEM the pee!

*From: The Rime of the Ancient Mariner

Blindsided by a Credit ‘Hit’

Just when loan modifications look to be the possible ‘silver-bullet’ to ward off foreclosure and credit damage, we now find out that they can adversely affect credit scores.

Even borrowers who have worked diligently to maintain good credit can be ‘dinged’ by a loan modification. “A modification temporarily reduces the monthly payment, which can be helpful if someone’s dealing with a pay cut. Typically, the principal amount owed on the loan is not reduced or changed and the amount of debt owed is not forgiven.” So what’s the point of additional credit damage?

Inconsistencies in credit reporting and the manner in which modified payments are viewed by the lender are part of the problem. Although there appears to be no ‘rhyme-or-reason’ to which lenders choose to report the modification as a negative credit event, the one apparently safe avenue these days is the Government’s Making Home Affordable program. Modifications created under this program are listed as ‘modified under a federal plan’ and appear to be exempt from negative credit reporting. If you are interested in finding out more about this program Mark and I are hosting a free workshop on February 11 (see blog sidebar for more information).

Even though a loan modifications affect on one’s credit is far less damaging than a short-sale or foreclosure, borrowers considering this option should speak with a nonprofit credit counselor before proceeding.

Some information for this post from an article in the Detroit Free Press, distributed via RISMedia

There’s Homeless and Then There’s Homelessness.

There’s the hopeful and exciting state of wanting, saving for and shopping for one’s first home. There’s the disappointment and loss that comes from losing one’s home in foreclosure. And then there is homelessness: that desperate state of existence without one of humankind’s most basic needs – a safe and weatherproof shelter.

Last week the Chico Enterprise Record ran a story about the upcoming Chico Homeless Census. We signed up for the training session on January 22 (others are scheduled for the 20th and 23rd). As Realtors our mission is to help people find homes, so we figured that anything that helps out the homeless fits within our mission. The actual count day is January 27. To volunteer in Chico, contact Meagan Meloy at meaganm@butte-housing.com or 514-7168.

Why census the homeless? One major reason is that they are not otherwise counted in our once a decade U.S. Census. Another is that this census provides a rare opportunity to get volunteers mobilized to check on the condition of homeless persons, and determine whether there are some who “might not be receiving services”. As described at change.org “the findings help quantify for policy makers (and, indeed, for the rest of us) our society's failure to ensure that every person has a safe, decent place to call home.”

While censusing the homeless would seem to be universally considered to be a desirable activity…it’s not. Why? “Although there is no direct connection between how many homeless are counted and the doling out of federal dough, that doesn't mean politics is left out of this national census. The image and perception of governors, mayors, and city counselors everywhere is at stake. If the number of homeless people drops, the local government cites this as an achievement. If the number increases, local government officials are criticized and advocates pressure for more support”. And then of course there are those who insist that homelessness is a choice, that the homeless are just ‘lazy’ and that they are nothing more than a drain on our social welfare system.

Other criticisms of the homeless census are that they are unscientific and subjective, that the census is not all-encompassing and that weather can distort the results.

We feel that the Homeless Census is a worthwhile investment of our time: after all, we’re Realtors…helping people who are without homes is what we do.

Upcoming Loan Modification Assistance Workshop FREE!

On February 11 at 6:30 pm we will be hosting a free workshop designed to assist troubled homeowners with understanding their options and filling out the necessary paperwork to apply for a loan modification.

Under the Government’s Making Home Affordable Program lenders throughout the country have received incentives to provide borrowers with relief in the form of modified home loans. At this workshop we will provide: a list of the nearly 100 participating lenders along with their phone numbers; addresses and fax numbers; a list of materials that the lender will require to modify your loan and Loan Modification Applications for you to submit to your lender. In addition to providing detailed instructions on how to fill out the forms we will be available to try to answer any questions about the forms or the program.

This workshop is provided as a public service to anyone looking for assistance and there are no fees or obligations of any kind. All information is strictly confidential and will not be shared or sold. The workshop location is the upstairs meeting room at 1101 El Monte Avenue, off of Humboldt Avenue, Chico

You Have to Ask Yourself . . .

Yesterday Mark and I attended a clinic on the subject of foreclosures and options, in preparation for the Loan Modification Assistance Workshop we plan on hosting in February. The clinic was provided by Legal Services of Northern California at 541 Normal Street in Chico. A young attorney gave his thoughts on the subject and answered numerous questions. Besides Mark and I there was a young couple concerned about the future of their home investment and a single contractor/homeowner whose income from construction work had tapered off sharply forcing him to make partial payments on his mortgage. The information and answers provided ranged from eye-opening to shocking!

The presentation and discussion generally dealt with two areas of interest: loan modifications and foreclosure. The information on loan modifications was helpful but also equal parts encouraging and discouraging: Encouraging was the fact that the federal government has designed a very ‘well-intentioned’ plan to encourage lenders to modify the loans of distressed homeowners, the Making Home Affordable program. This program has a ‘user-friendly’ website and by all appearances gives hope that one may, without too much hassle, be able to obtain a loan modification. Discouraging was how poorly prepared the banks are to implement the plan, and stories abounded of endless phone calls, run-arounds and dropped calls! The advice provided for those deciding that loan modification is their preferred option is to call daily, stay on the phone, ask for a supervisor and don’t give up!

The more surprising advice however was that troubled homeowners should consider the sacrifices they are making in their lives – retirement savings, kids college funds, family time, etc.; to decide whether or not trying to keep their home is really the right thing to do! Questions were raised and discussed regarding the wisdom of ‘throwing money’ at a home that is worth $100,000 less than the loan on it – when other investments might actually improve the financial position of the borrower. The questions of whether it was ‘moral’ to walk away from an obligation and the impacts of a foreclosure on neighboring properties were dismissed as misplaced, and the emphasis on being true to ones own financial self-interest were deemed a more moral choice. Banks were demonized as uncaring, faceless corporations, interested only in their own profitability.

The take-away message from the clinic was that distressed homeowners must ask themselves one big question: Do I really want (love) this home? If the answer is yes, and keeping the home is a higher priority than other things that might have to be sacrificed to keep it, than attempt a loan modification to ease the burden in these challenging times. If however the answer is no, the advice given was to “stop making the payments, invest the saved money in other things, do not leave the house until you absolutely have to, let the bank foreclose and get on with your life”!

Saving Your Home by Making Your Loan More Affordable

During the heady times of the real estate ‘bubble’ Chico homeowners enjoyed some of the highest appreciation in the nation. Two to three years now after the bubble first leaked and then burst, Chico infamously has among the higher default rates in the country.

If declining home values were the only issue there wouldn’t be too much of a problem, but the compounding impacts of payment increases on adjustable rate mortgages and higher unemployment has exacerbated the problem. For awhile distressed borrowers floundered in attempting to negotiate loan modifications with lenders who were unwilling to deal with borrowers or acknowledge the magnitude of the problem.

Enter the Making Home Affordable Program introduced by President Obama (watch video at http://www.youtube.com/watch?v=PnGqRcn476U ) . Per the T.A.R.P. (Troubled Asset Relief Plan) bailout plan, lenders who received federal bailout funds are obligated to work with borrowers who are having trouble making their mortgage payments. The Making Home Affordable Program provides troubled borrowers with free counseling services, a generic application form and instructions for what type of documentation they will need to convince their lender of the need for a modification. It also provides contact information for the 100 +/- loan servicing companies enrolled in the program nationwide, which includes most major lending institutions.

To find out more about the program go to http://www.makinghomeaffordable.gov/ .

Make 2010 a Great 'Real Estate Year' for You.

It’s the first working day of 2010, what options are there for making this a ‘growth year’ for your personal finances? You’ll likely get lots of advice on the issue from numerous sources. Our advice is specific to the Chico area, and how real estate can contribute to making this a successful year for you.

1. BUY LOW. Butte County home prices are the lowest they’ve been in 5-8 years, and that’s just listed prices. Some bank owned and pre-foreclosure properties are selling well below listed prices. Some cash buyers are purchasing foreclosures at auction for less than their current value and ‘flipping’ them for a profit.
2. BECOME A RESIDENTIAL OR COMMERCIAL LANDLORD. Loans for investors are harder to come by, which has made commercial properties harder to sell and has led to some great deals on investment properties. Business closures over the past two years have left a higher than usual number of commercial buildings available. From apartment houses to automotive shops, if you’re in the position to do so this can be a great time to pick up a building to house your own business or to rent out to others.
3. SELL FAST. There is a common misconception that Chico-area houses are not selling, that’s just not true. Homes priced competitively based on current values and especially those in the ‘entry-level’ home category are regularly receiving multiple offers, over asking-price offers and quick closes. If you’ve owned your home for 10 years or more it’s worth well more than what you paid for it.
4. IMPROVE FOR THE FUTURE. If buying or selling are not in the cards this year perhaps this is a good time to focus on updating or upgrading your property. Adding inexpensive square footage like a family room, adding a bathroom to a one bathroom home or remodeling an outdated kitchen can provide a good return when the time comes to sell down the road. Simple cosmetic fixes like exterior paint and landscaping can do wonders for your homes value. Government programs designed to help the economy contain rebates and incentives for home improvements including energy efficiency and updating. Unless you’re doing it for other than investment purposes you may want to avoid changes that cost more than the return they provide, like a swimming pool.
5. GET ‘FREE MONEY’. Two assistance programs available through April 30 of 2010 provide $6500-$8,000 dollars in incentive money for purchasing a primary residence depending on whether you are a ‘first-time’ or ‘move-up’ buyer.

2009 and it’s limiting economic factors - both real and imagined are old news. Let’s look at 2010 with optimism and make it the year we dream big and make our dreams happen!