Archive for April, 2008
FHA Loans come to Santa Cruz
April 17, 2008
What do Appalachia and Santa Cruz have in common? I’ve never been to Appalachia so I really couldn’t tell you. I hear it’s beautiful though. Natural beauty aside, another thing that Appalachia and Santa Cruz share is that FHA financing is available in both. And if it’s good enough for Appalachia, it must be good for Santa Cruz too.
It’s been a long time since there’s been FHA funding available in Santa Cruz. It used to be that home prices were just too high in Santa Cruz to qualify for an FHA loan. There’s a little space on the California Residential Purchase Agreement form under the “financing” section to specify whether or not you’re using an FHA loan, but until recently, I had never seen that box checked.
The dramatic drop in some property values in Santa Cruz county has opened up a world of opportunity for many buyers that was simply out of reach before. Unfortunately, this new world isn’t as glossy as the old world of sky-high prices for tumbledown shacks. Many parts of Santa Cruz county have been declared as declining markets by many lenders, and those lenders are requiring stiffer down payments, which serve to put this less-expensive real estate out of the hands of would-be buyers.
Don’t you worry - about a thing - ’cause every little thing’s gonna be alright. Your Uncle Sam is crooning I Will Take You Home. You see, FHA loan limits for California have been increased greatly, and now come all the way up to $727,750 for single-family residences. This is a temporary increase, and was passed as part of the Economic Stimulus Act of 2008.
So what’s the deal with an FHA loan? How is it going to save the bacon of would-be home-buyers? For one, FHA loans are not subject to these “declining markets” down payment requirements. With an FHA loan, you need just a paltry 3% down. In fact, using CHDAP (California Housing Down Payment Assistance Program), you can get a loan for that 3%, too - yeah baby, I’m talkin’ 100% financing, woo hoo! And you thought the party was over.
Before you run right down to the bank, though, know this: there’s a catch. There’s always a catch. The big catch is that the FHA requires that the property meet certain minimum standards. There’s quite a few FHA minimum appraisal standards to meet, actually. It’s nice to have a house that meets FHA appraisal standards, of course - but what if it doesn’t? Who is going to pay, the seller? You? You’re probably not going to want to pay - you may not be able to afford to pay, since you’re low on cash, and that’s the reason you went with an FHA loan in the first place.
The California Residential Purchase Agreement has a space in the FHA financing paragraph to enter how much the seller will have to pay for required FHA repairs - this is given as an amount “not to exceed.” But what if the repair costs exceed that amount? Zoinks.
Another bummer is that FHA requires mortgage insurance. They’ll take 1.5% right up front on the loan amount - so if you’re buying a $400,000 house they will want $6,000 to pay for the insurance. Not only that, they’ll want 0.5% of the loan amount per year - so on a $400,000 loan, that’s another $167/month added to your home payment. I wouldn’t worry so much about the initial 1.5% payment, though - in a market like this, you can probably get the seller to pay for it.
Time for the proverbial bottom line: if you don’t have a lot of cash for a down payment, and you’re buying a pretty solid home that likely meets FHA appraisal standards, and you think you can get the seller to pay your FHA mortgage insurance - an FHA loan may make sense for you. Talk to your lender - if you need a referral, please let me know!
Posted by SantaCruzBroker at 7:04am
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Foreclsure News - from Santa Cruz and Beyond
April 15, 2008
I drive my wife crazy with my singing - and not in a Marvin Gaye kind of way. One thing I like to sing to her to wake her from slumber is Good Morning - my rendition is especially horrible and all I really know is the chorus part. But hey, I still think it’s better than a nasty alarm buzzer. And it is also better than getting woken up by the morning news, especially in these dark days.
You may have heard this one on the drive in to work, or perhaps they were bantering about it on NBC’s Today Show or something:
[From Bloomberg.com: Worldwide]
U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners gave up their homes to lenders.
Yeah, good stuff. That’s what you want to hear as you write out your next mortgage payment check!
Of course, you know the famous saying - all real estate is local. What’s happening in Peoria isn’t really all that germane to what’s happening in bucolic Santa Cruz. So what is going on in Bucolic Santa Cruz? Read on:
[From Median home price drops to $650,000 - Santa Cruz Sentinel]
The switch pushed the median price of a single-family home down in March to $650,000 from $682,500 in February — but not as low as $599,000 in January, when 33 percent of homes sold for less than $500,000. The median is the mid-spending point of what sold during the month.
Only 75 homes sold in March, the fewest number of sales for a month in 11 years, an indication of buyer reluctance despite lower list prices. The previous low — 143 sales — was set last March.
That’s an interesting article, and it has more sales data from the aforementioned Gary Ganges, who I talked about briefly in my blog entry from yesterday. According to the article:
Ganges doesn’t specifically track REOs but he found 12 of the 28 homes sold in Watsonville in January, February and March were bank-owned.
Only 12 of 28? Hmm, that seems a little low to me. I do specifically track REOs, all the time, because that’s where the best bargains are to be had, and I’m always looking to find my clients the best deal possible. I just did a search, and I looked at all closed sales since the beginning of the year (up til now, mid April). I included Watsonville and the outlying areas (but not north Monterey county), and counted houses, condos, and multi-residential properties (actually, I don’t think any multi-res sold in that time period). My findings?
There were 35 sales of such properties since the beginning of the year. Of those, two were short sales, and twenty-two (22!) were bank-owned REO real estate. Actually, I’m surprised the number isn’t a bit higher. It should be noted that a few of the others that sold were in the city of Watsonville’s affordable housing program, and there was one Measure J property.
Sigh. Welp, I’m off to my office meeting. Keep up the good work everyone!
Posted by SantaCruzBroker at 7:54am
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Santa Cruz Real Estate Market Data - Revisited and Revamped!
April 14, 2008
I can’t tell you how many times a day people write to me and call me just begging to know the latest real estate sales data for Santa Cruz county. It happens so often that some days, it feels like all I do is field calls about how many condos sold in the San Lorenzo Valley in Q1 ‘08.
OK, I’m being facetious. In fact, that hardly ever happens. More often than not, when people call me out of the blue it’s because they either a) want money or b) want to buy a house, not necessarily in that order.
The fact is, though, that many people in our beautiful area do, from time to time, have more than a passing interest in the real estate sales data in the Santa Cruz area. And for those of you who do, I have something I’d like to show you.
In order to legitimately call SantaCruzHomeBroker.com the best site on the internet for information about Santa Cruz Real Estate, I feel that it’s important to have as much information about the local real estate market as possible. For this reason, I have had for some time a set of pages with sales data.
I’ll come clean. I don’t laboriously compile this data and make it available for you. That’s what Gary Ganges does, and he’s very good at it. Instead, I pay a small company who does it for me, and they do a far better job than I could ever do. What I do is I integrate that sales data into my web site. And, this nice small company has recently upgraded their offering considerably. Of course, they have also upgraded their pricing considerably as well - not too happy about that part, but truth be told, I spare no expense to bring you the best Santa Cruz Real Estate web site in creation.
From the looks of it, though, the upgrades appear to be worth every penny - nice and heavy on the use of Flash, so it must be good! Check it out:
Santa Cruz Real Estate Market Data
Spend a few minutes checking it out. One that I’d like to highlight is that you can now set up the system to send you your own custom market data report. You just configure the report how you want it - you choose the county, city, property type, date range, etc. - and then click “View Report.” Next, you can click “Save Report.” You will need to create an account to save your report and have it sent to you - but don’t worry that I’ll spam you mercilessly to death after that, because I won’t.
Posted by SantaCruzBroker at 7:04pm
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Slow news day
April 11, 2008
Well, it’s a slow news day. Every morning I scan the headlines to see what’s new. A couple of days back, I don’t know if you heard, but Santa Cruz Title is consolidating its operations, getting rid of two offices. Also a couple of days back, I read an interesting article in, of all places, the Modesto Bee about the new California Gold Rush - REO property. As anyone who is out there seriously looking to pick up some bargain real estate knows, these cheap homes have lots of bidders. The market overall may be in the tank, but hey, when a property is seriously under-priced, people go after them like sharks for blood in the water.
But all that is yesterday’s news. Today, no fresh crisis has yet to erupt, but hey, it’s only 8:00 AM, give it time. But I wanted to use this moment of comparative calm to get caught up.
Edit:
Oops, I forgot - WAMU is scaling back its mortgage operations considerably.
Posted by SantaCruzBroker at 8:02am
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The smells of home cookin’
April 09, 2008
I was out looking at some property today, and I noticed that a sign had been posted on one of the doors in the area. I’m always interested to see when signs are posted on people’s doors - it’s usually a notice that the home has been sold at a trustee’s sale, or there’s a “three day notice to quit” the property, or there’s going to be an auction of the property, something like that. But this notice was a little different.
It seems that some neighbor had been cookin’ up something a little less savory than a tasty Swanson’s Hungry Man!
This begs the question about disclosure, of course. There is, naturally, a requirement that the seller of residential property disclose to the buyer if the house has been cited as being a meth lab, to wit:
According to the “Methamphetamine Contaminated Property Cleanup Act of 2005” a property owner must disclose in writing to a prospective buyer if local health officials have issued an order prohibiting the use or occupancy of a property contaminated by meth lab activity. The owner must also give a copy of the pending order to the buyer to acknowledge receipt in writing. Failure to comply with these requirements may subject an owner to, among other things, a civil penalty up to $5,000. Aside from disclosure requirements, this new law also sets forth procedures for local authorities to deal with meth-contaminated properties, including the filing of a lien against a property until the owner cleans up the contamination or pays for the cleanup costs.
I wasn’t looking at the property with the meth notice, but I was looking at the one right next door. What are the seller’s obligations when it’s the neighbor who has been cooking up a little’ white cruch? “Hey, uh, before you buy my house, get a load of the sign on the one next door.”
Posted by SantaCruzBroker at 9:39pm
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