Monday Morning Coffee – California Tax Credit

Monday Morning Coffee

 California Tax Credit

Good morning!

I hope you enjoyed the great weather this weekend and got out a bit.  A couple of good things last week that will effect the real estate market (good in terms of real estate, you will have to decide for yourself if they are good long term).  First of all, the Governator signed a California Home Buyers’ Tax Credit that will help offset the expiration of the Federal Tax Credit next month.  The credit is $10k max spread over 3 years.  More details on the blog.  The second was that it appears Greece is going to get its own bailout.  The reason this is good is that a default by Greece could have a ripple affect throughout the European Union and to all the bondholders of Greek debt – many of whom happen to also be the people and/or countries we need to buy mortgage debt.  So, the fact they didn’t just los e a bunch of money is a good thing.  The downside is that instead of a depression in Greece, the pain will be spread and diffused throughout Europe and while this brings a chance of a larger problem later, for today’s San Diego real estate market, it’s good you will be able to get a loan next month.

Ok, we have three new listings coming.  Two will come on this week (photos Tuesday) and one next week.  Here’s the best part – none are short sales!

• This week we have a 2300+sf  4 bedroom home in Garden Gate @ 4S Ranch.  There is a bedroom downstairs.  We will be hitting the market in the low $600k range.  It has a very private backyard and we sold the one next to it last month in about 8 seconds.
• The second one for this week is on the picturesque 4S Ranch Pkwy and is a 1600+sf Summerwood home.  Very nice 3 bedroom with beautiful hardwood floors.  It will be priced in the low $500k range.
• Next week we have another Garden Gate home at just over 1900sf.  This is a 4 bedroom with a peek ocean view.

If you are interested in any of these, please give me a call.

That’s it, Enjoy the Coffee!

The Life We Choose

Here’s the premise: We are all, right now, living the life we choose.

This choice, of course, is not a single, monumental choice. No one decides, for example, “I’m going to move to L.A., and in five years I will be a waiter in a so-so restaurant, planning to get my 8-by-10’s done real soon so that I can find an agent and become a star,” or “I’m going to marry a dreadful person and we’ll live together in a loveless marriage, staying together only for the kids, who I don’t much like, either.”

No. The choices I’m talking about here are made daily, hourly, moment by moment.

Do we try something new, or stick to the tried-and-true? Do we take a risk, or eat what’s already on our dish? Do we ponder a thrilling adventure, or contemplate what’s on TV? Do we walk over and meet that interesting stranger, or do we play it safe? Do we indulge our heart, or cater to our fear?

The bottom-line question: Do we pursue what we want, or do we do what’s comfortable?

For the most part, most people most often choose comfort – the familiar, the time-honored, the well-worn but well-known. After a lifetime of choosing between comfort and risk, we are left with the life we currently have.

And it was all of our own choosing.

Peter McWilliams

Have a Great Week!

Scott Voak

858 688 0189

California Homebuyer Tax Credit – New

California Homebuyer Tax Credit

A Quick Overview of AB 183 Tax Credit

On March 25th, Gov. Schwarzenegger signed AB 183 Homebuyer Tax Credit into law.  Here’s a quick look:

What Does the Tax Credit do?

• Provides $200,000 000 statewide for a 5% (up to a max of $10,000) credit from the purchase of a home against your California Income Tax.
• The law is a little confusing and I don’t have a complete explanation, but the way it reads:
  • You must purchase a qualified PERSONAL residence between May 1 and December 31, 2010  OR
  • You must purchase a qualified PRINCIPAL residence between December 31, 2010 and August 1, 2011 based on a binding contract signe prior to December 31, 2010.

Who is Eligible?

• First time home buyers    AND
• Any buyer of a new home (never been lived in before).  Most likely, this is “Principal” residence as builders sell new homes well in advance of move-in.

How is this different than the expiring Federal Tax Credit?

• This credit is taken over 3 years rather than all at once like the Federal Credit.
• People who have previously owned a home are not eligible unless they purchase a new home from a builder.

What is the reason for the new credit?  What are they trying to do?

• 40% of first-time home buyers in the past year said they would not have purchased a home without the Federal Tax Credit.
• That credit expires for homes put into escrow afterApril 30th.
• This is an attempt by the state to offset the loss and keep demand strong.
• By applying to two different types of homes, the state is trying to accomplish 2 things:
  • Motivate people to buy new construction which will help support employment and help builders finish projects and avoid financial difficulties which would flow through to the banks which have loaned them money while the recovery is still fragile.
  • Motivate first time buyers who might not otherwise afford a home to purchase a foreclosure and use the tax credit to make repairs – thereby employing people in the services fields (this one seems like a stretch to me as the credit isn’t really enough to fix up a home if it is in bad shape).
• By driving people to action this year, but applying the credit over 3 years, the government gets the added stimulus to the economy now, but spreads the impact of lower tax revenues for the state over 3 years – you know, like when someone else is Gubernor and has to try and balance the budget.

So, is this good?  I think overall it is a good idea as it will help support the real estate market when the federal credit ends.  Since I think the recovery is very fragile, the support is a good idea.   If all the homes purchased maximize the $10k credit, 20,000 buyers will benefit.   I am concerned at the large number of vacant homes that are going through foreclosure.  When these hit the market, I think the market will soften and if that does happen, my hope is the 20,000 buyers purchase those homes, because if we spur the building of a lot of new homes with this bill and then the vacant homes come on the market, we could end up with more homes than buyers again.  However, I understand the goal, and think it is a good try.

Monday Morning Coffee

Monday Morning Coffee

Afternoon Edition

Good morning/afternoon (depending on where you are reading this),

Came down with the “You’re Too Old to Go Out 2x a Week and Still Get Up at 6am” cold and spent Sunday in bed.  Just getting up and moving today.

This will be a short one.  I posted a blog on healthcare and the economy, not that I thought healthcare would affect the economy yet, but that the timing of the push may be indicative of a potential problem coming. 

We do have a nice listing this week.  We put it on the market on Thursday and had a well attended open house on Sunday (or so I have been told, since I was in bed).  It is a 3 bedroom home in the Cedar Creek development in 4S Ranch and if you are interested in seeing it, let me know quickly as it will likely be gone by Thursday.

That’s it. Enjoy your week and Enjoy the Coffee!

Living With Passion

Living with purpose and passion is based upon decision. You may choose to live day after day, one after another, in a completely ordinary existence. OR you can choose to greet each day with a possibility mindset. A purposeful mindset. A Passionate mindset.

Begin each day with these questions and be amazed.

1. Why is it important for me to engage myself in my work passionately and purposefully each day?

2. How will I choose to allow my attitude effect how I address stressful situations at work today? How can I be more affective and proactive in regards to stress and attitude?

3. When am I most likely too react with the most passion and purpose today? Meeting with clients? Working on my computer? Following up on a lead? Take note of what makes your passion come alive, so you can use it to better your work performance.

4. Where within the organization am I best able to express my passion and purpose? Is it working with my peers? My supervisors? Clients? Interdepartmentally? Where physically do I perform the most purposefully?

5. With whom do I need to spend time in order to maintain balance as I pursue my passion and purpose? Within the organization, who best supports me?

6. What choices will I make today that align my purpose and passion with the tasks at hand at work?

7. Who am I called to be today as an expression of my passion for living?

By Julie Jordan Scott
5passions.com

Does the Healthcare Push Mean A Market Drop?

Ok, I usually don’t prescribe to conspiracy theories, but…

Back in August, I said I thought the tax credit for first time home buyers and the Fed’s purchase of Mortgage Backed Securities would be extended becuase without them, the economy might slump which would end the chance for Congress and the President to enact healthcare (with a down economy, the people are more likely to resist a reach by the federal government for more control and power).  Like clockwork, both were extended to the end of March (April for the tax credit). 

Why is this important now?  Well, here we are in late March and the President is putting up a huge fight for healthcare ahead of the Spring Recess.  Why now?  With such a controversial bill that is unpopular in most polls, don’t you think he would want to send the Congress home to stump for it so they can come back with popular support and vote?  What could go wrong between now and April 12th that would make the bill less appealing and harder to pass?  The only thing I can think of is that the President and Congress believe that when the stimulous ends (especially the Real Estate portion of it), that the economy could start to slide again. 

Note that I am not saying healthcare will cause the economy to slow down.  I am guessing that healthcare is being pushed NOW because they now the economy is about to slow down and they want to push their pet project before sentiment against it and them turns more negative.

I know.  Sounds thin.   If it weren’t the fact that Congress is full of politicians, I would dismiss it completely.

Monday Morning Coffee – Conflicting Messages on the Recovery

Monday Morning Coffee

Does the Statistical Recovery Have Legs?

Good Morning!

I hope you had a nice weekend.  It was nice to see San Diego weather make a return appearance on Sunday – hope it stays around for awhile.  We had a slow weekend, I worked a half day Saturday and Sunday but got to spend some good time with Zach in the mornings and Cori in the evening (fired up the Jacuzzi for the first time in several months on Saturday). 

We are still staying busy as we listed two homes last week (details below) and put one buyer into escrow.  Countywide, inventory stayed fairly steady last week. 

I saw an interesting article (Thoughts from the Frontline by John Mauldin) addressing the economy.  It talked about the conflicting signals we are seeing in the economy:

On the positive side:

• Corporations are more productive and have more cash on hand than anytime in the last 50 years. 
• The amount of corporate debt is falling, meaning companies are getting stronger financially.
• Capital spending jumped last quarter – a good sign for employment because once you by the capital equipment, you have to hire someone to run it.
• We are close to the point where we will stop losing jobs and start adding them (if trends continue)

On the negative side:

• More than 5 million homeowners are behind on  mortgages.
• 30% of manufacturing capacity is idle (meaning companies don’t have to buy a lot of new equipment (which creates jobs in making the new equipment), but can just absorb the idle capacity).
• 19 million homes 15% of the total, are vacant.
• 1 in 6 Americans is underemployed or unemployed.
• Average American worker has lost $100k in wealth over the last 2 years.
• Transfer payments (read welfare and unemployment) from the US Government make up 18% of personal income!

Stop and read that last one again.  1 of every 5 dollars that an American puts into his account is coming from the rest of the taxpayers through the government as unemployment or welfare.  Ouch. 

The point of the article was that some of the signals are pointing to a recover and the Fed may be watchful for inflation, but that there are a lot of indicators (mainly employment the level of federal subsidies) that indicate the economy is still very fragile.  It did not draw any conclusions or make any predictions, but did note that this seems to be a very “statistical recover” and not really a recovery that is helping the people – therefore when the stimulus ends, so could the recovery.  It will be interesting to see – but I am tired of interesting, let’s just turn this thing around already.

As I mentioned above, we did take two listings last week.  Prep and photos are this week and next, but if anyone is interested, here are the details:

Tierrasanta – 3 beds, 2.5 baths about 1500 sf with open space behind.  This one will go out at about $450k.

4S Ranch – 3 beds, 2.5 baths about 2344 sf on a corner lot.  This will be about $600k.

If you are interested, let me know and I will try and get you in during the photos.

Well, the kitchen faucet just broke, so time to wrap it up and head to Home Depot.  Enjoy the Coffee!

Crabby Old Man

When an old man died in the geriatric ward of a nursing home  in North Platte , Nebraska , it was believed that he had nothing left of any value.   Later, when the nurses were going through his meager possessions, they found this poem. Its quality and content so impressed the staff that copies were made and distributed to every nurse in the hospital. One nurse took her copy to Missouri. 

The old man’s sole bequest to posterity has since appeared in the Christmas edition of the News Magazine of the St. Louis Association for Mental Health. A slide presentation has also been made based on his simple, but eloquent, poem. And this little old man, with nothing left to give to the world, is now the author of this ‘anonymous’ poem winging across the Internet.

Crabby Old Man

What do you see nurses? . . . .. . What do you see?
What are you thinking . . . . . When you’re looking at me?
A crabby old man . . . . . Not very wise,
Uncertain of habit . . . . . With faraway eyes?

Who dribbles his food . . . . . And makes no reply.
When you say in a loud voice . . . . . ‘I do wish you’d try!’
Who seems not to notice . . . . . The things that you do.
And forever is losing . . . . . A sock or shoe?

Who, resisting or not . . . . . Lets you do as you will,
With bathing and feeding . . . . . The long day to fill?
Is that what you’re thinking? . . . . . Is that what you see?
Then open your eyes, nurse . . . . . You’re not looking at me.

I’ll tell you who I am. . . . . . As I sit here so still,
As I do at your bidding, . . . . . As I eat at your will.
I’m a small child of Ten . . . . . With a father and mother,
Brothers and sisters . . . . . Who love one another.

A young boy of Sixteen . . . . With wings on his feet.
Dreaming that soon now . . . . . A lover he’ll meet.
A groom soon at Twenty . . . . . My heart gives a leap.
Remembering, the vows . . . . . That I promised to keep.

At Twenty-Five, now . . . . . I have young of my own.
Who need me to guide . . . . . And a secure happy home.
A man of Thirty . . . . . My young now grown fast,
Bound to each other . . . . . With ties that should last.

At Forty, my young sons . . . . . Have grown and are gone,
But my woman’s beside me . . . . . To see I don’t mourn.
At Fifty, once more, babies play ’round my knee,
Again, we know children . . . . . My loved one and me.

Dark days are upon me . . . . . My wife is now dead.
I look at the future . . . . . Shudder with dread.
For my young are all rearing . . . . . Young of their own.
And I think of the years . . . . . And the love that I’ve known.

I’m now an old man . . . . . And nature is cruel.
Tis jest to make old age . . . .. . Look like a fool.
The body, it crumbles . . . . . Grace and vigor, depart.
There is now a stone . .. . . Where I once had a heart.

But inside this old carcass . . . . . A young guy still dwells,
And now and again . . . . . My battered heart swells.
I remember the joys . . . . . I remember the pain.
And I’m loving and living . . . . . Life over again.

I think of the years, all too few . . . . . Gone too fast.
And accept the stark fact . . . . That nothing can last.
So open your eyes, people . . . . . Open and see.
Not a crabby old man . . . Look closer . . . See ME!!

Remember this poem when you next meet an older person who you might brush aside without looking at the young soul within. 

We will all, one day, be there, too!

February San Diego Sales Numbers

February San Diego Home Sales

Looking at February sales numbers, there were 2059 homes sold (includes all types and relies on the hope that agents have listed homes sold as “sold” in mls). This is an 8% reduction from last year and combined with January’s 10% reduction, puts us about 400 homes behind last year at this time. The trend is likely to continue, as there are also fewer homes in escrow than there were last year.
The slower pace of sales is more than offset by the lower number of listings (37%) than we had at this time last year. This makes sense as inventory really started to dive last year in April as the banks were actively holding off the foreclosure process. Inventory was down at the end of February compared to the end of January by about 5% (550 homes), but there is already an additional 400 homes on the market on the 6th of March.
The graph below shows the last 6 years activity (I’m going to have to go to a quarterly graph soon)

San Diego Home Sales (MLS)

A couple of interesting points to see when it is graphed out like this:

1. Sales volume (demand) has remained fairly consistent since late 2006 with the exception of the specific issues we had in the mortage markets in September of 07 and November of 08. 
2. The increase in March 09 was when the Fed started purchasing mortgages (which is supposed to end this month).
3. The drop in sales in January (last month) can be attributed to two factors:  First, there were a lot of closing in October and November as people were trying to beat the expected expiration of the tax credit (which is now been pushed to April contract/June close).  Second, new mortgage rules have stretched out closings past the normal 30 days.  You can see this in the fact that at the same time closings have fallen, homes in escrow increased – the activity is there, the government just put a kink in the hose with all the new regulations.  I expect we will see a strong March in terms of closings as these homes work their way through escrow.

An interesting chart to look at takes a look at inventory levels over the last several years.  For the chart below, I am measuring inventory of San Diego homes differently than others do.  I am including all homes that are Active on the market, plus those that are Pending and Contingent.  The reason for this is twofold:  The Contingent designation is relatively new.  In the past, these homes might have been included in Active or Pending, so there would be errors either before or after the Contingent designation was created if I did not capture all the activity.  Also, there are buyers with offers on multiple shortsale homes and they aren’t going to close on more than one of them.  Showing all the homes that are available and in some stage of closing vs those that close each month helps mitigate this factor. 

San Diego Home Sales - Inventory Levels

Note: Inventory is calculated using a 12 month average of sales.

At first look, the graph doesn’t provide much interesting information.  But when you look at the % change in inventory, you can see that it started to rise in the second half of last year.  While this is akin to saying “things are getting better because we are losing fewer jobs every month,” it is a start of a change.  It shows that inventory is reaching an equilibrium on its own and the creates the possibilty that when the stimulus and tax credit expire, we may see inventory start to climb on its own – with or without the banks releaseing foreclosures.