California Hosung Market Forecast

The 2016 Forecast is out and while the market is expecting to remain strong this year, indicators are leading us to conclude the market will not continue to gain speed next year. 

   
Price gains are tapering. 

 
Modest improvements expected in 2016.

   

  

California fell further and has more room to gain.   
  

Gross Domestic Product remains underwhelming. 

  

Stagnant wage growth has resulted in a delay of the first time home buyer entering the market. 
  

International buyers came to invest, now that prices have rise , they’re staying on the sideline of the housing market. 

  

This indicates the peak has passed. 
  

Since rates are low, and inventory remains low, demand has remained solid. As soon as either of those factors uptick, the market will slow. 

  
Where are we headed based on what we saw last year. 
  

Finally, the forecast. For questions about the market, or these slides specifically, contact Realtor Amy E. Wright at 858-224-2562. 

 

San Diego Seller’s are in the Driver’s Seat

San Diego Sellers sit in the Driver’s seat of today’s market. Buyers aren’t in a frenzy, mostly because they can’t find what they want. The first-time home buyer is reluctant to move into the market. They are barely recovering from the recession, with stagnant wage growth, and debt mounted from schooling and credit cards. That said, the ones who are entering the market are ready and eager. The condo and townhome market has been dominantly owned by investors which when the majority of homes in a complex are non owner occupied, the complex will not qualify for the government backed FHA loan programs with a low 3.5% down payment. Many buyers are obtaining financial help toward their down payment and closing costs from relatives and Seller contribution.

Sellers who price their home to sell aggressively, will see multiple offers. Those who do not will sit while others sell. Inventory of homes for sale is down significantly, and mortgage rates have not increased to wane demand. The time is now! Prices have increased as much as they ever have over the past 3 years, affordability cannot sustain such growth. If you want to make a move and are serious about selling, consult a Realtor with a home visit to discuss condition and pricing of your home. Of course, if you are just curious, you can get a free online evaluation  to see recent relative property sales.

Buyers today have access to sales information to help them make an informed buying decision. When a home is priced even 5% above market, buyers make choose to look the other way and wait until there is a price reduction. Price it right to get offers within the first 30 days or risk selling your competition.

This Month in Real Estate, March 2016

FSBO: The Facts

As a real estate professional, it’s always a good idea to keep up with news and studies on what is currently going on in real estate. The National Association of Realtors is a great source for regularly updated market statistics—we’ve grabbed some of their recent data on FSBO to present here:

From the marketing data in the National Association of Realtors report, we can infer that FSBO sellers are not generally getting a lot of marketing exposure—very low percentages appear anywhere with the potential for bigger audiences (including only 15% on social media and 10% on multiple listing sites).

Additionally, FSBO sellers cited the following difficulties:

• 18% – selling within their planned length of time
• 12% – understanding paperwork
• 6% – (for each) having enough time, preparing the property, getting the right price

Time, whether it’s having enough to deal with everything or being able to sell within a desired period of time, is a big issue. Other statistics show that while a sale by agent might take 69 days, the FSBO will average 88 days.

Why Do Sellers Choose FSBO?

Check out this graph from Realtor.org:

The most common reasons are by far that the homeowner wants to save money or that they’re selling to someone they know. Does this desire to save money always pan out? Not necessarily; if an agent can get them a better price as we saw in the previous statistics, they will probably come away with the same, if not more in proceeds (and this without any DIY hassle!).

Why Do FSBO Sales Often Fail?

There’s always going to be a marked difference between going with a professional and trying to take care of a relatively complicated transaction one’s self. FSBO sales fail for a variety of reasons, but here are a few of the most common:

The Homeowner Isn’t Really Prepared

There are a few tasks a good real estate agent will always recommend a seller prepares before listing their home that FSBO sellers may not be entirely aware of. Besides knowing about what to prepare, it’s often easier if an unbiased set of eyes checks the home over—owners may be too close to notice things that should be done.

You often get only one shot to impress potential buyers, so it is important that home preparation is done well in the first place.

The Work Involved With Buyers

Screening, negotiating, closing, responding to queries—there’s a lot of time-consuming work to be done when dealing with possible buyers, work your average seller simply doesn’t have enough time to deal with effectively.

The time involved can be dragged out when the buyer isn’t very familiar with what to do or say and how to negotiate. This is where experienced agents definitely have the advantage to get the sale.

Timing

There are a couple of aspects to timing that should be understood; one is that there are better times than others to put a property on the market (such as seasonal variations), and these will depend on the specific area the property is in.

Secondly, there is a concept of “golden time” that says a property will receive bigger offers within the first week of going on the market and go down after that. FSBO sales can fail when the house sits for too long on the market (perhaps because the owner doesn’t have a lot of time to deal with marketing or negotiations), and they then receive lower offers than they should.

Contract Procedures

This comes down to experience again. If an owner is unfamiliar with contract procedures and negotiating, they may either make a bad job of it or simply lose the sale.

Exposure

We saw from those statistics earlier that in general, FSBO sellers are not doing a lot of marketing of their properties. This may mean they just don’t reach the right people.

On the other hand, part of the role of an agency is to get exposure for the properties on their books. An agency not only has many different channels for exposure at their disposal, but they usually have potential buyers coming to them, which shortens the process.

Pricing

Many FSBO sellers overestimate the price they should put on their property, put off potential buyers, then have to sell at a lower price later on when they’ve had the property sitting on the market for a while.

If a house is priced too high, the property may struggle to attract any offers at all, leaving future prospects to wonder why that property is still sitting unsold. This may make it more difficult to close any deals.

 

Pacific Gate Update

I want to share some exciting updates on Pacific Gate, Bosa’s newest luxury high rise downtown. We have had over 5,000 guests through the Rethink Downtown gallery in just two months, the response has been overwhelming! We’re anticipating going to sale to our Priority Interest List in early 2016, ahead of any sales to the general public. I want to make sure that you have this for your clients, as many agents have had clients stopping in to see us on their own since they hadn’t received the latest details through their agent: World Class Architecture by Kohn Pederson Fox & Designer Interiors by Hirsch Bedner Associates 2 Bed floor plans range from approx. 1,276 to 1,948 sq ft 3 Bed floor plans range from approx. 2,034 to 2,608 sq ft Unparalleled services from Porter & 24-hour Lobby Attendant to full-time Chef Concierge for Resident requests Resident’s Guest Suite and Lounge with full Kitchen Luxury Fleet of Cars and Private Boat Share for Residents Pricing starting from the $1.4M’s Priority Interest List sales targeted to begin early 2016 Completion anticipated for late 2017 There are, of course, many more details coming regarding the amenities and services which I look forward to sharing with you soon. In the meantime, our Vision Brochure can be downloaded here. We created this version of the brochure without our contact information so you may email it to your database and have them engage with you directly to get registered for the Pacific Gate Priority Interest List.

Understanding Mello-Roos

WHAT IS A MELLO-ROOS FEE? Mello-Roos refers to special tax districts that receive a separate charge on property tax bills in addition to the 1% property tax rate allowed by Proposition 13. The funds are used exclusively to pay for public facilities such as police and fire departments, schools, parks, roads, traffic lights, water mains and systems, emergency services and libraries. WHO AUTHORIZED THE ESTABLISHMENT OF MELLO-ROOS DISTRICTS? When Proposition 13 passed in 1978, local governments were unable to use property taxes to construct roads, schools and vital community facilities so California needed an alternative way to fund community improvements. Co-authored by Senator Henry Mello and Assemblyman Mike Roos, the Mello-Roos Community Facilities Act of 1982 authorized the establishment of Community Facilities Districts (CFDs) by public agencies to obtain fees and issue the necessary tax-exempt bonds to fund construction of new public facilities. HOW ARE MELLO-ROOS ASSESSMENT FEES ESTABLISHED? Mello-Roos fees are normally established at the request of a major developer to finance the necessary public facilities to serve a new development but are also used in older areas to finance schools or community additions. HOW CAN I DETERMINE IF MY PROPERTY IS IN A MELLO-ROOS DISTRICT? Your property tax bill will identify Mello-Roos fees as a CFD, followed by a number and the amount of the tax which varies from one CFD to another. The tax might vary year-to-year but may not exceed the maximum amount specified in the Public Report when the district was established. HOW MUCH IS A TYPICAL MELLO-ROOS ASSESSMENT FEE? Typically, a formula that relates to the size of the home (lot size or square footage) is used to determine the amount of an individual assessment. The amount of taxes is established before the home is built. Whereas Prop 13 limits are on the value of the home, Mello-Roos taxes are equally and uniformly applied to all properties. HOW DO I PAY THESE TAXES? Your Mello-Roos tax will typically be collected with your general property tax bill. HOW ARE MELLO-ROOS REFLECTED ON REAL PROPERTY RECORDS? Mello-Roos show as a lien on the property similar to a regular tax lien and are recorded as a “notice of special tax lien” to differentiate a continuing lien to secure each levy of the special tax. WHEN A PROPERTY IS SOLD, HOW ARE MELLO-ROOS AFFECTED? When reselling a property in a CFD, the Seller must disclose to and provide the Buyer with a Notice of Special Tax from the local agency that levies the Mello-Roos. Mello-Roos tax is not based on the value of the property; they are assessed against the land so any increase in a property’s value will not affect the tax amount upon sale of a property. Any delinquent payments must be satisfied before the sale of real property since the unpaid amounts are liens. WHAT HAPPENS IF A TAX PAYMENT IS LATE? Because the Mello-Roos tax is usually collected with your general property tax bill, the Facilities District that obtained the lien may withdraw the assessment from the tax roll and begin foreclosure proceedings after 90 days. Mello-Roos taxes are subject to the same penalties that apply to regular property taxes. HOW LONG WILL THESE MELLO-ROOS FEES BE IN EFFECT? The bonds are normally paid off in 20 years and cannot exceed 40 years. Those who purchase a new home have the option to pay for their Mello-Roos tax in its entirety at the time of purchase. WILL MY MELLO-ROOS FEE INCREASE? Mello-Roos taxes can increase but only by a maximum rate of 2-percent annually over a 25-year period. It’s also possible that this tax will decrease if State or other funds become available that could be used to reduce existing bond indebtedness or to construct new facilities in lieu of additional bond sales. WHO CAN I CONTACT REGARDING MELLO-ROOS FEES? Contact your local County Assessor’s office to obtain the contact information and phone numbers for each Mello-Roos District. NICOLE MCGRATH Sr. Account Manager eMail: Nicole.McGrath@Title365.com 8880 Rio San Diego Drive, Suite 1100, San Diego, CA 92108 760.492.9093 Phone KRISTI NEAL Account Manager eMail: Kristi.Neal@Title365.com 8880 Rio San Diego Drive, Suite 1100, San Diego, CA 92108 858.752.1115 Phone

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