Credit Where It's Due.

Gotta’ give em’ props – Coldwell Banker saw the opportunity to get some valuable press this morning and jump ahead of the competition by supplying a private extension to a public program. As we’ve reported here many times – the Federal Home Buyers Tax Credit will sunset this coming Saturday. Indicators suggest that the program has been at least partially responsible for a dramatic monthly gain in existing home sales in the past couple of months. With the pending demise of this popular program team Blue and White has stepped in to prolong it…it is unknown whether Chico area Coldwell Banker offices will participate, but if they do expect something similar from Century 21, Keller Williams, Prudential and others. Here’s commentary direct from the CB spin machine.

"The federal government did its part to encourage millions of Americans to achieve their dream of home ownership with the help of the home buyer tax credit," said Jim Gillespie, president and chief executive officer for Coldwell Banker Real Estate LLC. "As the credit expires, Coldwell Banker Real Estate is encouraging buyers who haven't found a home yet to continue looking, while bringing a new audience of home buyers who were unable to qualify for the tax credit into the market. We are confident that this private sector solution will represent a significant step toward continued recovery of the housing market."

"The Buyer Bonus Sales Event will allow participating Coldwell Banker home sellers to essentially extend the benefits of the credit," said Gillespie. "Without restrictions such as household income caps, the Coldwell Banker Buyer Bonus Sales Event allows for greater participation for all homebuyers. And our sellers have a unique opportunity to allow their home to stand out from the competition in their marketplace."

Finding a Pulse.

The home buyer tax credit that we have been touting for months is about to sunset…has it done any good and will buyers rush to take advantage of it in these last 2 weeks? “Yes” and “Sort of”…

The market is definitely more active now than it was when the tax credit was extended last fall, it now has a pulse and blood pressure is rising! Multiple offers are not unusual on well priced or particularly appealing Chico area properties. Those pesky short-sale and bank owned properties are still around but now they’re more like just another option for buyers who are shopping. Is this a function of buyers wanting to take advantage of the tax credit? According to my buyer clients the tax credit isn’t what induced them to start looking for a home, but it has definitely created an incentive to find a home sooner (before April 30) than later.

Example: I worked with a buyer for several months and he found a ‘short-sale’ (pre-foreclosure) home he really liked, so we made an offer. Because the short-sale process is so dysfunctional and the banks so poor at handling them, we had waited almost a month and a half just for a response to his ALL CASH, 14 DAY CLOSE OFFER. Two weeks ago, with the tax credit deadline looming he abandoned the home he most wanted and opted for a very nice home that did not require bank approval to sell. The compliant sellers agreed to almost every request and we closed escrow in record time.

If not for the federal tax credit who knows how long we might have waited for the bank to respond to our offer? There are numerous tales of banks taking six to eighteen months to process these.

Trend or "Bump"?

The Chico market has ‘felt’ significantly busier the last few weeks – we’ve personally listed four properties and sold three, but is it indicative of a ‘trend’ or just a seasonal ‘bump’? Some prognosticators are forecasting a ‘turn’ in the market.

According to Michael Brush in an article for MSN Money, eight months of rising home prices has buyers itching to make a deal while prices are still low. Expert investors such as Warren Buffett, Michael Rehaut of JP Morgan Chase and George Putnam of The Turnaround Letter are now actively considering investments in residential housing. They stress that savvy investors are getting in early, with a time horizon of three to five years.
More conservative investors like Stu Feldstein of SMR Research expect a moderate pickup in the next two years followed by a stronger recovery during 2012-2015.

Low housing prices, low interest rates and pent up demand are all factors being considered in these rosy predictions. The true test should come in May, as Federal Home-Buyer tax incentives expire…then we’ll find out how strong our market really is!

Take Heart - Cash is Still King!

Just when everyone (myself included) seems to be lamenting the complications involved in lengthy short sales and foreclosures, cash comes along to save the day! Yes, believe it or not, homes can and ARE being bought for cash these days AND the transactions are simple and quick. Here is a case study from the past week:

The San Jose Inheritance.

Ron’s father left him his 50+ year old home in San Jose, purchased for $5,000 in the 1950’s. Even in our deflated market the home sold for $415,000. Ron banked the cash and came to stay with relatives in Gridley, where he had spent time as a child.

Being careful with his money, Ron determined to get the best buy possible and save the rest of the money for his future. Fortunately for Ron (unfortunately for others), homes in the Gridley, Live Oak, Biggs area have seen incredible price drops. With Ron’s money and prices low it seemed that getting him into the home would be simple, but there was a hitch…

Enter the short sale / bank-owned property problem. Even with CASH in hand and an offer of 14 days to close, we could not get a response from the banks that controlled the short sales, had to compete with multiple offers for bank owned properties or had to look at eviscerated houses where distressed owners had removed appliances and trashed the interiors. Even cash seemed impotent.

Then along came a home in small-town Biggs. One year old, custom-built with upgraded amenities and a detached shop perfect for Ron’s music recording hobby. The anxious seller, knowing how difficult to sell Biggs had become in the current climate was extremely accommodating on price and every other aspect of the transaction. Two weeks from the day that our cash offer was made Ron began moving his things into his new home.

Return of the CONDO?!

Having just sold two Chico condominiums and listed two others it occurred to me that perhaps the golden era of the condo is finally upon us, when the much maligned townhouse realizes it’s full potential in the real estate pantheon…or not.

A recent article intimated that condos or condo-like housing developments would be the dwelling of choice in the coming decade, as retirees, empty nesters and young buyers recover from the real estate bust and prepare for a more fiscally conservative, lwo maintenance and socially connected housing plan. So I did a little data sleuthing to find out just how condos are faring in today’s marketplace.

As the bubble ‘leaked’ and housing sales slowed in 2006 condos took the first and worst blow as buyers retreated to the more predictable values of single family homes. Now that it appears that we are on the backside of the slump condo sales are actually holding their own, with price per foot values approaching those of single family residences (SFR).

Looking at sales within a five mile circle centering on downtown Chico from October 2009 to present, there have been 33 condos sold compared to 420 SFR’s, although this figure is deceptive due to the fact that there exist far fewer condos in the area. Houses still sold quicker than condos, averaging 74 days on the market compared to 129 for condos. More telling is the closing gap between average price per foot. While houses sold at $166 on average during this period, condos (always cheaper to construct) sold for 87% of what houses sold for – or $145 per foot.

If you too suspect that condos may be the newest old thing in the coming years, there are currently 40 of them (compared to 293 houses) for you to choose from.