The San Diego Real Estate Blog

Signs of a Market Swing in Progress

If you're thinking about buying or selling a home in the San Diego real estate market you may want to be aware the market is starting a cyclical swing.  As a real estate professional here in the North County area (Encinitas, Cardiff, Carlsbad) for a number of years, I've had a passion for staying ahead of the market data and listened to the word on the street that usually precedes things like newspaper articles (I take issue with Saturday's Union Trib story), flyers from the title companies and national headlines. That's one of the reasons I love open houses because it not only exposes the market to properties you're trying to sell but it gives you a chance to meet the real buyers on the street and take their pulse.

Since March of 2006 most of the real estate professionals here in San Diego have been wondering why all the buyer traffic virtually dried up and now it's in the full blast mode. There's a few factors to consider. The holidays are a distraction to buyer focus which makes the sellers anxious. When the sellers become impatient they're forced to address realistic pricing if they're motivated to sell. If not, they rent their properties or pull them off the market completely. In January 06 we had about 22,000 homes on the market and now in January 07 we're approaching 15,000. Consumer confidence has heightened over the last quarter of 06. Buyers are tired of hanging out waiting for the market to change and they think it's bottomed about as far as it's going to go (I agree). Interest rates are slightly above 6 percent for a 30 year conventional, the jobs report is favorable indicating stability in the economy, although retail sales were somewhat disappointing for the end of year. I think those indicators explain why there's been so much buyer activity since New Year.

What's really interesting about the market right now is that seller activity hasn't caught up to the buyers needs. This is really important to know if you're going to sell in the first two quarters of 07 because you're timing is excellent. There's always a moment in time in any market when it's good to jump in or out. Now's the time to jump in if you've been waiting to sell because we're approaching our traditionally strong selling season when inventory increases. You're ahead of the curve right now. When inventory is down, you have a better chance of getting the price you wanted for your home if there are fewer homes available.

Multiple offers seem to be occurring more frequently. The sellers who have begun to price realistically are getting simultaneous offers from buyers who have watched and waited by monitoring their "automatic email" updates. As an real estate professional, I have access to over 900 programmable fields on our MLS database that I can program and automatically give you an update via email every time there's a price adjustment or a new property on the market. This is a great way to shop without pressure or watch the market for signs of change.

Lastly, foreclosures are on the rise. I haven't seen any effect on the San Diego market as a whole but it has affected individual neighborhoods where the sellers bought at the peak, lived off their equity by pulling money out of the their home to pay bills or make improvements and now they're upside down. Some of the "scary loans" (ARM's and interest only) that people engaged 3 years ago are now adjusting upward. With homeowners mortgage payments out of balance with incoming salary, they have no choice but to walk away. Most of the buyers that I'm working with now have bigger down payments to avoid that situation.

What I see as "on the street" indicators that most people won't see until market data is released for several months, points to stability in the San Diego real estate market. By March or April we'll be fully into the selling season here so it will be interesting to see if inventory increases. If it doesn't, that points to buyer confidence because the inventory is being used up faster than it's being supplied. Call me if you want to chat, email me or leave a comment here. I'd love to know about what you're seeing, hearing or doing so we can share it with everyone.

What Are Your Credit Resolutions?

by Debbi Nyberg, Mortgage Specialist, Mike Dunn & Associates

Many of us make New Year’s resolutions to improve various aspects of our lives.  Among the most popular ones: to eat better, exercise more and work at losing that extra weight which most of you have already started.  Another healthy resolution you may not have thought of, but should, is to protect your credit.  Regular monitoring your credit could help you detect fraudulent activity – activity that could be signs of identity theft.  Unfortunately it is quite prevalent these days and I see it often!

Find out where you stand by reviewing your credit report and no better time to do it then at the beginning of the New Year.  Your credit report contains information about your identity, what kind of credit accounts you have, and how you pay your bills.  There are three national credit reporting agencies.  Because not all lenders or creditors report their information to all three agencies/bureaus, your credit may vary from one bureau to another.  So, I recommend that you check all three for accuracy, make sure your financial records are accurate.  This year, make a resolution that can really make difference…get to know your financial situation before you start shopping possibly for your dream home.  Know your credit score…and how it affects your ability to borrow, your credit scores dictate the rates you can get from lenders and the cost of money you pay for that mortgage…the higher the scores, the lower the rate…period!

Personal information about you and your family is available from a number of sources.  It is in your best interest to monitor this information periodically to make sure it is accurate.  Here are a couple of websites that offer free credit reports that you can download and print your credit profile: www.annualcreditreport.com and www.freecreditreport.com

These are wonderful resources and a great way to get a “Report Card”, need assistance or have questions regarding your credit report findings; you can email me.

Unfortunately, it is not yet possible to outsmart identity thief’s and credit fraud entirely, but by managing your personal information carefully – and with a full understanding of it’s importance…you can substantially reduce the chances it will happen to you.

There’s no foolproof way to avoid having your identity stolen, but there are a number of precautions you can take to minimize your odds of being a victim.  Here are a few of them:

• Be careful about giving out personal information indiscriminately.
• Never give anyone your credit card number, social security number, or any other personal information for a purpose you do not understand…ask to use other types of identifiers when possible.
• Protect your mail/guard your trash.
• Don’t let a thief “dumpster dive” to get your personal information…tear or better yet, shred your charge receipts, bank statements, expired charge cards and pre-approved credit offers.  Promptly remove all mail from your mail box after it is delivered.  If you plan to go away, call the Post Office and request a vacation hold on your mail.
• Guard your credit cards.
• Minimize the information and the number of cards you carry in your wallet.  If you lose a card, contact the fraud division of the credit card company.  If you apply for a new card and it doesn’t arrive in a timely manner, contact the issuer.  Also, when you receive a new card, sign it immediately in permanent ink and activate it immediately too!
• Pay attention to billing cycles.
• Contact creditors immediately if your bills arrive late.  A missing bill could mean an identity thief has taken over your credit card account and changed your billing address.
• Safeguard personal information in your home.Especially if you are having service work done in your home, employ outside help, or have a roommate.
• Find out who has access to your information at work.
• Be sure to verify that records are kept in a secure location, and are accessible only to employees who have a legitimate reason to access it.
• Be smart about passwords and PINs.
• Memorize your passwords and personal identification numbers instead of carrying them with you.  Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SSN or your phone number, or a series of consecutive numbers.

Again, make a resolution to yourself that can really make a difference this New Year…wishing you all your financial goals in 2007 and beyond.

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Seller's Physical Law

Sellers who are difficult from the start of a transaction will be able to push a buyer only so far before that buyer turns the difficulty back into the face of the seller.  When you’re selling your house remember that physical law. Negativity and lack of cooperation begets negativity and lack of cooperation in return. This has held true every time I’ve been involved in selling a home here in San Diego and I’ve seen it experienced often with my peers. As a seller you have to put yourself in the place of the buyer and try to understand how you’d feel if it was you buying the house.

Consider the case of the seller who was trying to take the cheapest route toward correcting his “section 1” termite work. In California, correcting issues with termite infestation or wood destroying organisms is typically the responsibility of the seller. In this case, the corrective work involved some extruded beams and some deck work that could have been patched, cut off or replaced depending on the extent of the damage. Although the contract allowed for some interpretation of how the work could be done in a normal and typical fashion, the seller chose to do it the cheapest way possible that wasn’t necessarily aesthetically pleasing. The buyer objected to how the repair was being done and expressed his displeasure because it didn’t resemble the original construction and it didn’t look neat.  So here’s what happened.

Back at the beginning of the transaction, the seller refused to negotiate in a timely fashion, wouldn’t fax or email and forced the buyer to overnight all his paperwork for signatures including several rounds of counter offers. The buyer took that to be a control issue by the seller. The recent difficulty with the termite repairs coupled with the buyer’s first exposure to the seller’s lack of cooperation and control maneuvering escalated into a level of non-cooperation on both sides. The seller demanded the buyer not communicate with the contractor doing the repairs, canceled a scheduled repair the buyer wanted to have done without giving him notice and asked the escrow company to cancel the sales contract. The seller had no legal right to cancel the contract but nonetheless it was just another obstacle the buyer now had to jump over. Had the seller been “reasonable” in the beginning, negotiated in a timely fashion by “normal communication means” and had done the repairs in a way that any normal buyer would have have deemed acceptable, this might not have happened in the first place.

The lesson to be learned is if you’re difficult as a seller, plan on the buyer taking the ball and running with it if there are any screw ups on your side of the transaction.  If you’re a fair seller on the other hand, there are signs you can look for that might indicate you’re dealing with a fair or unruly buyer (more on this later). Be careful what you become during a transaction because without fairness and communication you may create a situation that can only be resolved through mediation, arbitration or court action.

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House Keeping Prep for Home Sale

One of the first major steps you, as a seller, must take before putting your homes on the market is to clean each room from floor to ceiling. Windows must sparkle, lighting fixtures must shine, and tabletops must be clutter free. Depending on how long you have lived in the home, this step could be one of the hardest tasks to tackle. To get started, try checking out The House Keeping Channel for time-saving tips on cleaning, de-cluttering, organizing, and time management. You'll find advice for virtually every area of the home, including the exterior. Here's some highlights from the site:

Kitchens. Potential buyers will pay special attention to the kitchen, so it has to look its best. This section of the site houses articles and checklists related to keeping the kitchen clean. Sellers with limited time will learn about The 10-Minute ‘New’ Look, a quick way to clean the most visible areas of the kitchen and other high-traffic areas of the home. You can get their granite countertops sparkling with tips from Stone Care Made Easy, an article about cleaning natural stone surfaces. And to really speed up the cleaning process, you can Form a Family Cleaning Team.

• Tools. When you need the right tool to get their home clean, they can learn about the latest and greatest products here. From Organizing tools to Furniture & Dusting products, you'll find a little bit of everything.

• Garages, Patios & Home Exteriors. With all of the focus on sprucing up the inside of the home, it’s easy to forget about the other important areas. Consider putting these Garage Organizing Tips to use and to do some Exterior House Cleaning before prospective buyers arrive. If getting rid of the junk that’s filling up the garage and patio is a problem, you can learn about The Virtual Garage Sale as a way to get rid of their extra stuff.

• Windows. Natural sunlight does wonders for the appearance of a home, so give your windows a good cleaning. Here's a helpful strategy used by professionals for Painless Window Cleaning. Make sure you don’t forget to Clean Screens, too. It’s also important that any window coverings are free of dust and dirt, so share these Inside Tricks to Cleaning Window Shades and Blinds.

• HC-Pedia. If you clearly don’t have a clue about cleaning, you may need to consult this dictionary of cleaning terms. Each term includes a brief definition, but a more detailed explanation — including suggested uses for cleaning products, safety tips, and advice for cleaning various surfaces — appears when you click on a term. For example, under the entry for Acoustical Tile Ceiling, you’ll learn that dirt can be removed by using a dry sponge. Or clean a Rust Stain by rubbing it with a sponge dampened in lemon juice or plain white vinegar.

If a buyer is impressed by your imaculate clean home, they'll think it was well maintained and cared for and will want it all that much more. They'll think their "fix up process" will be less work and easier to move in ready to go!

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San Diego Price Drop Due to Condo Conversions

The Southern California home price median set a monthly record in December of $495,000 up 3.3 percent over December 2005, even as the number sales slipped in all six counties, Data Quick Information Systems said yesterday.

As reported earlier this week, the December median price inSan Diego County fell 6.4 percent to $483,000, from December 2005, the only county in the region besides Ventura to see a year-over-year price drop. The Ventura median price fell 5.9 percent, to $593,000.

San Diego's home-price record of $518,000 was set in November 2005 and has now dropped 6.8 percent, due in large part to a flood of lower-priced condo conversions, industry analysts say. DataQuick said the overall price drop in San Diego County was closer to 4 percent adjusted for seasonal sales factors and the changing mix of housing types for sale.

The typical real estate cycle produces a price peak and then a downturn before reaching a plateau from which future increases take place. "We need to remember that prices have gone up 100 percent in Southern California the last four years," says DataQuick President Prntice Hall. "Most of that increase is here to stay," he adds.

From January 2002 to last month the median home price of a single family re-sale home has doubled.

Download SalesChartDec.pdf

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Is the Living Room dying in America?

When’s the last time you went into your living room? I live in a home in North San Diego County that’s 2000 sf with 4 bedrooms and single story built in 1973. The majority of our time is spent in the kitchen primarily, the office/bedroom second, the master bedroom third and the family room fourth. That leaves the living room a distant last and rarely do we go in it. I’ve seen many of the same model in our neighborhood and people have done some amazing things to fix them up but still I don’t see many people using their living rooms. I’m seeing a trend (I preview about 15 homes a week) that builders are going with “great rooms” (combining living room and family room) or going with a much smaller version of the family room in order to appropriate space to the rooms that are used more.

Builders have seen the needs and desires of home buyers for years. They study the trends and build and design homes based on how they think those trends fit into the American lifestyle. One of those trends is to build a living room that’s centered on the fireplace and a flat panel media screen. Seems like the flat panel TV has been single handedly responsible for drawing people back to American living rooms.

We’ve had so many trends over the years and this seems to me to be one of the most interesting. At Syracuse University I took a course in space relationships. It was the study of furniture and room shapes to people’s behavior. Windows, TV’s, colors and things like that were of great influence in those studies. It’s so interesting to see what’s going on with the living room though. Hey, in the 70’s we had functionality with closed floor plans, 80’s huge masterbedroom with small living area, 90’s big living area and small bedrooms and now a multifaceted switch to this!

Let me know what you think and why you go do or don’t go into your living room. Think about it. Wasted space or usable space??

San Diego County MLS Data Suggests Selling More Difficult Than You Might Think

Data recently available on the Sandicor MLS system of San Diego County shows that fewer than 1 in 3 homes sell during the first listing period. That’s a rather amazing statistic but, when you figure that the majority of sellers aren't realistic about what the market will bear and concentrate on what their neighbor got months ago in a different market, it's accurate. The reality is that in order to sell at top market value, based on the competion, there’s lots of compromises that will need to be made in conjunction with a Herculean effort from their real estate professional. Sellers can set the selling price but it's the buyers who set the market price. Here’s some of the factors that cause the other 2/3 of sales to withdraw from the market, turn into rentals or simply give up all together.

First and foremost, if your real estate professional is not with a fairly high powered company, the likely hood of your securing higher quality and a greater number of buyers may be deminished. Sometime agents and companies are working at low commission rates and unfortunately you get what you pay for. (What might you expect, for example, if you went to a discount dentist out of the country?) To often people concentrate on what they’re going to save rather than what they’re going to make and the result is disappointing. If you attract “high quality” buyers visiting your listing, you’ll more likely get top dollar. The negotiation skill level of the agent has lots to do with it too. If the agent can’t even negotiate his own commission, can you imagine what he’ll be thinking when your first contract situation turns difficult? Ask the agent if he has a Certified Negotiation Specialist designation and check his or her attitude up front.

Larger real estate companies are known for their advertising power. It stands to reason that a company with many offices in San Diego County, not to mention one who is #1 in listings taken and sold, shall command better advertising rates and a larger volume of them simply because they can. Ask if someone (ad coordinator) is directly responsible for double checking copy, pictures, prices and listing status in all media areas including multiple web sites, newspapers, magazines and the MLS (multiple listing service.) Ask to see charts indicating the number of hits per week etc.

The quality of printed materials is an indicator of how good your ads will look . The sign that goes in your front yard is, as well, a direct reflection on the quality of your home. If your home looks good to a buyer on the outside they’ll think it’s worth looking going in. Know how many real estate agents put only 1 picture into the MLS for a listing? Lots. There is space to put 12 pictures plus a virtual tour so why not use it? In the case of Realtor.com my company is required to put at least 6 pictures in their listings because statistics show that listings with pictures are viewed 250% more often that those without. In CaliforniaMoves.com, featured pages are available that are zip code specific. When your zip is searched your home comes up front and center. Another technology available is called Lead Router. Any web inquiry made on a listing is texted to the agent's cell phone with contact information and the nature of the inquiry within 15 seconds. If I can’t respond quickly it goes to 75 other qualified agents in my office that can handle the inquiry.

So, if you want to be part of the the 30% that sell, use a company and agent that’s going to do extraordinary things and put out great efforts for you. Getting noticed by the right buyer means doing almost everything possible to get there. The only other piece of the puzzle is your motivation. You have to ask yourself, do I want to just “list” my house or “sell” my house? If you want to sell it, do what’s necessary to get the job done efficiently and with your profit picture in mind. When your market time is working against you, it pays to be efficient and come out of the gate in a gallup.

4 Tips for Avoiding a Mortgage Mistake

By Debbi Nyberg, Mortgage & Lending Specialist Mike Dunn & Associates

I met with a new client recently who showed me some paperwork that was presented to him by another lender. It’s always upsetting to see how some mortgage representatives and companies try to take advantage of borrowers (and it’s even more troubling when I see that they succeed).

Let me tell you his story: First of all, his existing loan had a prepayment penalty that was scheduled to go away a year after he was being encouraged to refinance. The prepayment penalty was approximately $10,000. The new lender was proposing a loan origination fee of three points on a new loan amount of $500,000, meaning that the lender would receive $15,000 for the creation of the new loan. Also, the terms on the new loan were only marginally better than his existing loan, and certainly not good enough to warrant paying over $25,000 in fees to obtain the new loan.

Fortunately for my client, he asked for some advice before he closed this transaction, and became further educated as to what an expensive mistake this would have been. Despite being pressured by the representative and his manager, my client decided not to move forward with this costly proposal.

There are a few lessons that I hope you take from this client’s situation that will empower you as you research your mortgage choices and with whom you choose to work.

First, get a strong recommended action form your lender and mortgage representative. Ask how long they have been doing home loans. If they have only begun in the last few years, right when the mortgage market became very attractive, you may want to proceed with caution. There have been a lot of profiteers that have just started in order to make quick money, and do not have a career in mind. Additionally, they often do not know the product they are selling you. This means that they are not able to discuss with you all of the features and benefits of competing mortgage products so that you can make an informed decision as to the loan being suitable for you.

Second, make sure that the representative takes the time to answer your questions, and that there is some depth to those answers. They should be able to explain why they are making a particular recon emendation and why it would make sense for you to consider that program.

You should look for someone who makes the process as transparent as you want it to be. Your costs should be competitive, fair and clearly explained. I find that my clients cover the full range of personality types, from those who want as much detail as possible to those who don’t want any detail, but want to feel confident that they are being treated fairly and not being taken advantage of.

Third, do enough research so that you know what the current interest rate market and what competitive fee structures looks like. You should know what range of rates and fees you expect to be quoted when you start to narrow the choices of who to work with. This will give you an excellent basis for knowing if you are getting quotes that are outrageously high or uncommonly low.

Obviously, if the quotes are high you will know that someone is trying to unfairly profit at your expense. If the quotes seem low, also known as “too good to be true”, be very cautious. Unfortunately, in the mortgage business there are some unscrupulous lenders who will offer a very at¬tractive quote at the beginning to induce you to start the process with them. They will take you right up to the very end of your escrow period and then deliver the real terms, which are invariably higher, when you don’t have an opportunity to make other arrangements.

This “bait and switch” approach victimizes many borrowers and it is always disappointing to see that these lenders are rewarded with the business. Those of us who give an accurate quote at the beginning of the transaction will make a point of asking you enough pertinent questions about your credit score, loan amount, value or purchase price of your home, and whether it would be likely that we could fully document your income for the lender. Getting a loan quote without exploring those areas is virtually meaningless, and will contribute to your loan terms being changed at a future date.

Those changes will almost never be in your favor.

Finally, if you are not getting a good feeling about who you are working with, or if there are too many questions that are not being addressed directly and to your satisfaction, give yourself some room to make a change.

Don’t put all your eggs in a basket that looks unstable. On the other hand, once you find a representative that is honest, forthright, transparent, and the pricing of the loan is fair, be loyal to them. Although money is important, you will remember the quality of the transaction long after minor costs differences are forgotten.

The Buyers Are Back!

I've always liked open houses because they tend to reflect buyer's attitudes about the market. They can also be an indicator or what design concepts/floor plans/ideas are "in" and what's "out." I had two very succesful open houses over the holiday and I feel they're indicitive of a real estate market on the rebound.

On New Year's day I held open a $4.5m 8000sf 5bdr, 5.5 bath on .82 acres at The Preserve at Del Mar. It's situated high above Del Mar and Carmel Valley on the Del Mar Messa which commands a 360 degree view of the Los Panasquitos Preserve. The buyer traffic was continous with about 8 groups of people touring the home. For the high ended market that's a good attendance. The architect has combined the living room and family room together into a "great room" concept that many of the people loved. Personally, I've wondered for years why so many people have living rooms and never go in them. This gives you the ability to enjoy both together. There's also a 10 foot high pocket door that's about 25 feet long that opens to the Northern view. When the entire wall is open it totally brings the outside in and it's a great concept that's very unique. The home is called Casa de Vesta which means house of the hearth in Spanish. It's "one" with nature and the environment with it's finishes and design.

The other open house I did was the Saturday before Christmas. It's situated in Encinitas on 1.04 acres that's gently sloping and has a 180 degree ocean view on the top of prestigeous Crest Drive. The home is 1740 sf with 3+1 bedrooms and lots of room for expansion. It's listed at $1.5m. There's nothing else like it around. We had about 10 sets of people through that open house.

The buyers are returning to the market. There are many I'm working with right now and there are a number of agents in my office (of 75 agents) that have gotten busy as well.  Interest rates are moderate to low. The indication from the Fed is that rates may be lowered in the next few months to stimulate the housing and automobile sector. The forecast is for stability and a bottoming out of housing price reductions. We'll have to see what the "supply" does over the next 45 days but overall we're looking forward to a great 2007 here in San Diego in the housing market.