June 20 Weekly Analysis

The numbers for the Zip Code again look good for the past week.

It is obvious from the list of homes available in the Meadows. Notice that we do not even have a full page, whereas just a few weeks ago we went over to this page – and substantially.

This past week we had 19 new listings in the Zip Code, 23 homes went into Pending, and 11 homes closed escrow. Those are the kinds of numbers that decrease inventories, just as has been demonstrated with only 29 homes available today in Hidden Meadows.

The home we had on Caravan on Oak Ranch was one that went off the market last week – it was on the market just 8 days.

I am running the Meadows Realtors Caravan this month, and it is interesting. We have sufficient new listings every week to have a caravan every week, but people often list their homes prematurely and they are really not quite ready. We will have a new Realtors Caravan this next week. I am particularly interested in seeing the home at the corner of High Mountain and High Vista.

The market appears to be changing. This is just an anecdote to be sure but it is instructive. My son (who incidentally has owned Dolphin Realty for more than a decade), just sold a home in Lakeside BEFORE it was listed. He had 10 offers in one day of Open Houses, and sold the home for more than the list price. It closes in 21 days, and sold for $360,000: Because our agency has Property Management, and therefore we have a stable of painters, carpenters, plumbers, cabinetmakers, tile setters, etc. They are used usually for maintenance for the many homes we have in management, but now we are using them to rehab homes prior to resale.

My son tells me that there are a lot of “First Time” Buyers in the market today, and they have joined with investors in buying low-priced homes – but the investors are primarily into short-sale and foreclosures while First Time home buyers want turn-key homes at prices almost competitive prices to short sale and foreclosures.

The Meadows is just a bit too upscale to participate in the frenzy that is going on in those markets, but when a good value comes on in The Meadows it jumps off the market quickly. In the past two weeks we have had sales in three days, eight days, and again, eight days. Those sales, and others have helped reduce our Meadows inventory – and our current inventory is about what we would historically see over a long period of time during a “normal” market.

Prices at the low end appear to have solidified in The Meadows, but recent sales have put pressure on high end properties. When there is one short sale or foreclosure at the high end, Appraisers can mark that off as an anomaly, but when several take place virtually simultaneously then it becomes “the market.” That then becomes a problem even when a high end home sells at a high price – Lenders simply use all of the distress sales to determine the loan.

In the case of the home my son rehabbed in Lakeside, he told potential Buyers that the home was NOT going to comp at the sales price and that all Buyers would have to bring sufficient cash to make up the difference, if they really wanted it. They did – lots of them: Enough to sell the home for more than the asking price.

This situation may not last. It may be a situation that cannot transfer to The Meadows, but sales ANYWHERE in San Diego County provide eventual Buyers for The Meadows. It is all a question of time.

A Good Loan Option For Many People

I received a note from one of the many mortgage lenders I receive e-mails from, and he reminds me that one of the best loans on the market today is an FHA loan.

3.5% down, loans up to $729,750 “in higher cost areas” (whatever that means), you can accept a “gift’ from someone for down payment and closing costs; “No reserves required in most cases”; higher debt ratios and lower FICO scores permitted than for conventional loans; the FHA is more lenient on recent bankruptcy and foreclosures; and depending on your income, home purchases made before Dec. 1, 2009 may be eligible for up to $8,000 home tax credit.

All in all, it is a good loan series.

I don’t deal in mortgages, or do loans. Most Buyers in The Meadows have their own, longtime relationship with banks and mortgage lenders.

MLS Update

The home on Oak Ranch that was on the Realtors Caravan last week for $349,000 went into Pending – just 8 days from the listing to the Pending. It was a good buy, and one we knew would go quickly.

I still like the home on Glenmeade Way for $400,000.

There was a new listing on Sage Hill: A 4/4, 4,692 s.f. home, and swimming pool on .26 of an acre – for $695,000.

That was all there was in the Meadows for the past 48 hours.

Germane, Because of The Impact of Inflation on Housing

(This post from my “Political Blog” (http://usna1957.wordpress.com/) is “ported over” because inflation will impact housing.)

From a Bloomberg Blog:

Commentary by William Pesek

June 17 (Bloomberg) — It’s a plot better suited for a John Le Carre novel.

“Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit? “

The information USNA 1957  has seen was that the Bonds were dated in the 1930s, and there is a good chance that they are counterfeit. That would be bad in any time period – having $134 billion floating around, sold or bought, would change the value of the dollar in international exchange…but to have it happen now when China and Japan are starting to balk at the purchasing of new U.S. bonds because of first, the toxic loans still in the international market, and secondly the Treasury printing money around the clock so the Treasury can buy its own bonds and not suffer loss of face when the bonds do not sell internationally.

China and Japan are suspecting, rightly, that the U.S. will pay off its HUGE outstanding debts with cheaper dollars by simply inflating the money.

There is a little of that always going on, but right now it is on steroids.

The Obama administration probably thinks they can ‘nuance” this situation by permitting “just a little” inflation and then checking it before it becomes raging.

Many countries have taken this path. None have been successful and my confidence in this group of young, inexperienced tyros is much less that it would have been in Alan Greenspan – and I don’t think he could do it either.

Butt he question remains: What are two Japanese men doing with a briefcase of $134 billion dollars? If they were “Bearer Bonds” they were the same as cash. If they were real, there is NO WAY the suitcases, indeed some bills themselves were not GPS enabled – no one trusts anyone with $134 billion.

So much pure blind dumb luck in catching them – unless it was from electronic intercept or human sources.

So many questions. So few answers.

Are Things Getting Better?

The LA Times on-line today has a set of graphs that summarize the housing situation:

Headline: Southern California Home Sales Rise Slightly

SubHeads: Are Prices Finding Bottom?

But Sales Might Be Rising

San Diego County Goes Up a Little

That sounds good to me BUT I must tell you that I only see a temporary relief from our housing problems.

The State of California has placed a moratorium on foreclosures, but that just keeps homes from coming on the market incrementally, and gives us a date certain that a huge number will hit the market in 90 days!

That date is looming. It is going to be a problem – all at one time.

MLS Update

A relatively slow news day: Two homes in the Zip were listed in the past 24 hours, three went into Pending, and four closed escrow.

One of those that closed escrow was a home on Moonview, and it closed for an even $500,000. Actually, that is a good price for a 2,400 s.f. home in the Covenant. Admittedly, it was on an oversized lot (.38 acres), it was relatively new (2004), and it had serious upgrades (Sub-Zero, etc.) – but it also was a short-sale.

From a “Comp” standpoint, the most salient features are square footage, and price. That bodes well for sellers in the Meadows, less well for Buyers, but one swallow does not a Summer make and this one sale will not be determinant.

Still, it is another indicator that the market is at, or very near, the bottom.

Are We At The Bottom?

There are now Buyers in the market. Lots of Buyers in the First Time Buyers market.

My son (who is the Broker of Dolphin Realty) has been rehabbing a few of his Property Management properties during this slow sales time. He recently took a Lakeside property that he placed a $250,000 sale price as an estimate upon, did a rehab, and in one day of Open House took SEVEN offers at $357,500 (asking price) OR ABOVE.

The owner put $30,000 into the property.

My son says that the Buyers are so tired of Foreclosures and Short-Sales that they are flocking to properties where they can actually buy a property in a day, close in a month, and not spend months hassling with Lenders!

My son thinks that non-distress marketed homes, priced at distress prices will get bid up above distress prices – just for the opportunity to buy a hassle-free house.

Certainly even the two homes in the Meadows that WERE distress homes (short-sale and foreclosure) – one sold in 3 days and the other in 8.