From the President of Coldwell Banker

"A number of key housing market reports have come out over the past week, and they’re giving more evidence to the belief that the nation’s housing market is at long last gaining some solid momentum as summer gets underway. This week the Commerce Department reported that sales of newly built homes rose in May to the highest level since the recession. New-home sales increased 2.2% over the month to an annual rate of 546,000. That marked the best month of sales since February 2008, and it followed an 8.1% surge in sales in April. Although purchases of new homes are only about a tenth of all home sales, the report comes amid a other signs that home buying in general is on the rise, thanks to stronger job growth, wage increases, historically low mortgage rates and a gradual easing of lending requirements." All of this is probably true, but I just read from NAR, National Assoc. of Realtors, that investors are coming into the market. This is bad news, investors are always late, just as home buyers are lemmings, Don't buy when everyone else does, by after the adjustment. Here's my personal "Chriswold" prediction (nema nema), the market will readjust in 2016. So rent a little longer and then buy after the adjustment. I know, I am supposed to get you to buy today, but if you really can't afford it, for goodness sake, wait.

Spruce Up Your House on the Cheap

Are you a little bored with your house; or are you thinking of selling it, and you think it's a little drab? Here are a couple of inexpensive suggestions.

First curb appeal: Bright colorful flowers in the front yard. Paint the front door a bright color. Little better budget? Paint the front door, the trim, and the garage door an unexpected glossy color. Do you still have single pane windows? Are they corroded aluminum? If the toilets were installed before 1995, you might replace them. It's not that expensive, and the water savings may pay you back. What about the bathroom vanity? There are some slim new ones which will make the bathroom feel a bit larger. Hire some handy person to do the top dozen of those honey dos that you can do, but never quite get around to.

It's like a car. Do you find yourself walking up to a boring silver Prius, or an equally boring white pickup truck. Buy a colorful one, it puts a smile on your face. True story, I had a friend who was going to paint his Ranchero, brown. Are you kidding, brown?

I talked him into maroon. After all he had spent a lot of time sanding and priming, shouldn't the finished product be fun? So I hounded him until he relented. He took the prepared truck to Earl Schibe, for a 29.95 special. Did I just date myself? The truck came back beautiful. The best Earl Schibe job I had ever seen. All that prep work paid off. But it was Purple. He had a fit. Dave, what do you care it looks great. You were going to paint it brown. Well he took it back, he wanted maroon (my color suggestion) and he got it repainted, and he got orange peal. Sigh.

Preparing your home for sale

It is already February, and in many areas, including our San Mateo Coastside, the biggest market surge is in the spring. This means spring cleaning; before you put your house on the market.

Do I have to clean and prepare my house for sale, I live in a clean way, can't I just sell it?

The answer is you can sell any house in any condition, but most sellers, those who have the time and energy, and who want to squeeze the highest dollar they can out of their house, need to prepare the house.

Preparation comes in a couple of ways, fixing all of those

honey-dos

, getting a home inspector to examine the house and take care of some if not all of the simple repairs recommended in the report.

There is also the question of a pest report. I am nervous to tell you that even if you firmly believe you have no pest or dry-rot issues in your home, you may be wrong. Pest control inspections, include all wood destroying issues, so not only are we talking wood boring beetles, carpenter ants, dry-wood termites, and damp wood termites, to name a few, there is also the issue of dry rot from water damage, including areas such as door jams, incorrectly installed windows, sliding doors, water damage in the bathroom, near showers, toilets, and under sink leaks.

There are a couple of trends in this market worth noting: One is pre-inspection, paid for by the seller, and thus giving the seller a chance to study the problem. The seller may choose to provide a

clearance

, meaning the seller has the pest company repairs all of the damage, and warranties the house as free of infestation for one year, or the seller merely provides the report to the buyers, pre-offer, so they can determine whether they wish to receive a clearance, or simply write an

as-is

offer. Because of all of the as-is type offers sailing around this fast paced market, some sellers are opting to only provide the home inspection, and not the more specific pest inspection. Although this method of saving money is working in this seller's market, I do not recommend it in a more balanced market. ...and don't forget colorful plants, inside and outside when you stage your home for market.

whe must a house be fumigated

I received a call recently asking if

it was a law that a house be fumigated in California.

The short answer is no.

Okay then how often does a house need a fumigation?

Short answer, only when the house has too many wood destroying bugs to locally treat for them. Here's what I found on the pest control boards web site.

When drywood termites or wood boring beetles are found, does the structure always have to be fumigated?

No. Fumigation is not always required for treating drywood termites and wood-boring beetles. Fumigation is an all-encompassing treatment in which the gases permeate the entire structure, eradicating both visible infestations and termites that are otherwise inaccessible. If only a small area is infested, local applications may be used. The inspector will decide which treatment is necessary. You should be aware that the localized treatments will not eradicate hidden infestations elsewhere in the building.

Will fumigation eliminate all the termites and pests in the structure?

No. Subterranean termites require separate treatments to create a barrier between the structure and their nest in the ground. Under ideal conditions, the target pest will be dead or obviously dying by the end of the fumigation. Drywood termites can remain alive as long as a week after a lethal dose of a fumigant. Lethal doses vary for different pests, depending on the fumigant used. It is possible for household pests (such as spiders or cockroaches) to survive a fumigation.

So what are my alternatives?

Are there alternative methods to fumigation?

There are several alternatives for localized chemical treatments. There are, however, only two methods for whole-house eradication of drywood termites: fumigation and whole-house heat treatment. Other methods such as electro gun, microwave, and freezing with liquid nitrogen are local or spot treatments designed to eradicate termites in a specific area. These methods are not intended for whole house eradication and therefore are NOT alternatives to fumigation. The University of California, Berkeley, conducted a study for SPCB on these methods. A free, condensed version of the study is available on SPCB’s Web site, www.pestboard.ca.gov/howdoi/research.shtml.

First time buyer affordability; from the Cal. Assoc. of Realtors CAR.org

Housing Affordability Index - First-Time Buyer C.A.R.'s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state. Download the complete historical series: XLS First -Time Buyer Housing Affordability Index Methodology 2014 Q3 First-time Buyer Housing Affordability Index STATE/REGION/COUNTY Q3 2014 Q2 2014 Q3 2013 CA SFH (SAAR) 52 53 54 CA Condo/Townhomes 61 61 63 Los Angeles Metropolitan Area 55 55 57 Inland Empire 68 68 71 S.F. Bay Area 44 42 45 r US 75 75 74 S.F. Bay Area Alameda 42 40 44 Contra-Costa (Central County) 43 43 45 r Marin 29 30 37 Napa 44 48 r 52 San Francisco 34 32 36 r San Mateo 34 33 36 Santa Clara 44 42 45 Solano 71 72 76 r Sonoma 53 53 r 56 r Source: CALIFORNIA ASSOCIATION OF REALTORS® r – revised Note: The effective interest rate series previously used to calculate C.A.R.’s First-Time Buyer Housing Affordability Index (FTB-HAI) was discontinued in 2008. Beginning with this news release, the FTB-HAI will incorporate an effective interest rate that is based on the one-year, adjustable-rate mortgage (ARM) from Freddie Mac’s Primary Mortgage Market Survey (PMMS). The effective rate accounts for both the one-year ARM rate and the points/fees as reported by Freddie Mac.

The job market is stronger With the recession behind us, more and more companies are adding new employees to the payroll. The unemployment rate has dropped 5.8 percent and 321,000 jobs were opened up in November. All of this work equates to improved consumer optimism; The Conference Board's latest Consumer Confidence Index highlighted confidence weighing in at 19.5 percent higher than a year ago. As jobs continue to stabilize and moods lift, more potential homebuyers will enter the market as they become more eligible for a mortgage, and more capable of taking on those pesky mortgage payments. according to Zoe Eisenberg is RISMedia's Associate Editor. 17,000 jobs in April, pushing down unemployment rates to their lowest levels in nearly six years, according to the Mercury News. MLS reprots an 18% raise in home prices in San Mateo County.

CALIFORNIA HOME PRICES RISE

HOME PRICES RISE YEAR OVER YEAR IN SEPTEMBER Home prices nationwide, including distressed sales, increased 5.6 percent in September 2014 compared to September 2013, according to the September CoreLogic Home Price Index report. This change represents 31 months of consecutive year-over-year increases in home prices nationally. On a month-over-month basis, home prices nationwide, including distressed sales, dropped 0.1 percent in September 2014 compared with August 2014.

Re-post from CAR

Bill to Stop Tax on Loan Modifications Passes Legislature – updated 7/17/14 If the principal on your mortgage was reduced with a loan modification new legislation may lower taxes. The Legislature has passed AB 1393 (Perea), a bill that will prevent homeowners from being charged state income tax when they’ve had a mortgage loan modified to reduce the principal. Under current law, the forgiven debt created by a reduction in principal as a result of a loan modification isn’t subject to federal income tax, but is currently taxable under state law. The bill has been passed by the state Legislature and awaits the Governor’s signature. If signed, it will become effective immediately and is retroactive to January 1, 2014. This is great news for homeowners.

Historic Low for Young Adult Home Ownership Rate *

Young Americans are putting off home buying at unprecedented levels. The home ownership rate for the Millennial generation age group has fallen to its lowest level since the U.S. Census Bureau started tracking home ownership by age in 1982. The home ownership rate in the first quarter of 2014 for Americans 35 and under fell to 36.2 percent, dropping from 36.8 percent in 2013. Broken down even further, Americans in the 25-29 age group had the biggest decline in home ownership rates at 33.3 percent, followed by 47.5 percent for the 30-34 age group. Granted, home ownership for all age groups has fallen to 64.8 percent, the lowest level since 1995. But Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., says that high student loan debt and sluggish unemployment are added elements that are keeping many young Americans on the sidelines. “The labor market for younger people remains pretty bad. Obviously you’re worse off without a college degree, but for people with college degrees, if they have a regular job, often it’s not paying very well and often they are jobs that pay just as well for people who have just a high school degree,” Baker says. “They also have a lot of debt. So it’s not surprising that people in their late 20s or early 30s are less likely to buy a home than what might have been the case 20 or 30 years ago.” The unemployment rate for those ages 20-24 is 12.4 percent, according to March data from the Bureau of the Labor Statistics. The unemployment rate for Americans 25-34 years old is 7 percent, compared to the national average unemployment rate of 6.7 percent. “Those stories you hear about people in their 20s or early 30s living with mom and dad, those aren’t just stories, and if people don’t move out, they’re not going to buy a house again because we’re still in the after effects of the worst financial crisis in 75 years,” said David Wessel, senior fellow of economic studies at the Brookings Institution in Washington, D.C. * Source: “Homeownership for Millennials Declines to New Lows,” U.S. News & World Report (April 30, 2014)

2013 was the strongest real estate market in San Mateo county, since 2007. In fact, it appears to not have abated into 2014, as it normally would have. Here are a couple of graphs to bolster this statement.

It's the holidays again, and time for a little gratitude, for what you do have.

These daily habits are sure to make you happier... • Express gratitude. Write down three things you’re thankful for every day to help you appreciate the people, events and things in your life. • Change your perspective. If you can’t change a situation, change the way you see it. • Perform random acts of kindness. Altruism taps into your brain’s pleasure centers and may give you a sense of purpose. • Lighten up. Laughter improves your outlook, reduces stress and may even lower your risk of cardiovascular disease

"Single family inventory remains substantially lower than the same period from a year ago, but there is increasing progress in closing the gap. Compared to October 2012, there is a significant increase for single family median prices in all counties. Single family sales are still coming under pressure compared to October 2012. Median prices increased in San Benito County by 45%, Monterey County by 31%, Santa Cruz County by 29%, and both San Mateo and Santa Clara Counties by 12%." * source, MLSListings

Bad Harbor Commission Board

I had forgotten how bad board meetings can be to attend, as a member of the public. I have not attended any for several years, but one night listening to the dysfunctional Harbor Commission brought it all back to me like a bad dream. As one observer observed, the meeting could be summed up in one action, when Commissioner Tucker asked a staff person, whose imminent maternity leave had just been approved, to waddle across a crowded room to get him a glass of water.
Commissioner Holtzinger recently made a public comment that he was disappointed that members of the public were not observing these meetings. Well the fishermen and women of our harbor showed up this evening, and when he saw them all he immediately moved to table the agenda item regarding new lease fees, fish buying fees and fish license fees. It appeared he wanted to table the discussion until the fishermen got tired and left.
The rest of the agenda items appeared to have only one purpose, muzzling of Commissioner Brennan. It seems she has actually been trying to do things, like dredge the harbor, make plans for dredge the harbor in the future, which would be approved by the coastal commission, without the board needing to request emergency actions, oh and she held a committee meeting. Tsk, tsk, Commissioner Brennan. Did I say muzzle, I meant gag. You thought Washington DC was dysfunctional? You should listen to a Harbor Commission Meeting.

According to the National Association of Realtors

Strong Fundamentals Shore Up Home Sales

Daily Real Estate News | Friday, May 17, 2013

Uncertainty over federal actions remains a big hurdle

Home sales are on a sustained upswing, with solid gains in volume and price predicted for the next few years thanks to improved market fundamentals. But whether the federal government will derail further improvement remains a question, REALTORS® heard Thursday.

Existing-home sales are expected to hit 5 million at the end of this year and then grow to 5.3 million in 2014, up from 4.3 million in 2011, National Association of REALTORS® Chief Economist Lawrence Yun told a packed audience at his residential economic forum at the 2013 Midyear Legislative Meetings & Trade Expo in Washington.

Price appreciation will be strong, too. Yun said he expects gains of 8 percent this year and 5 percent next year.

The strong price growth reflects the overly tight inventory conditions in many markets, Yun said. And that’s not a healthy condition. What’s needed is a return to the market by small builders, but they can’t get financing because community banks, leery of banking regulations coming out of Washington, aren’t lending.

Until that regulatory uncertainty clears up, only the country’s largest builders, which have access to Wall Street bond financing, will be building. As a result, although building has picked up in the last year after years of flat-lining, the number of new units is barely at replacement level. To meet the pent-up demand that’s in the market right now, builders need to get some 1.5 million units on the market. They’re only getting about 1 million right now.

The good news is that the housing recovery is based on deep-seated improvements in market fundamentals. So as long as the economy stays on track, which economists generally say will be the case, the housing market should continue to improve well into the future.

To the extent that there are market risks, they largely stem from the federal government, which continues to look at ways to reduce its budget deficit. Washington is also writing rules to protect against future mortgage market problems.

Will the government pare back the availability of Federal Housing Authority financing through tightened lending rules? Will it require banks to meet stringent capital standards and underwriting requirements under Dodd-Frank Wall Street reform rules?

Another unknown is whether the government will it impose strict limits on the points and fees lenders charge for loan originations–what Yun called a kind of price control that could end up dampening loan availability.

Until these and other uncertainties are cleared up, the improving market will face headwinds, Yun said. As a result, although the market should continue improving, its gains are unlikely to be as robust as they otherwise would be.

—Robert Freedman, REALTOR® Magazine

An agent who was in our office is a celebrated hero from World War Two. His name is Les Williams. One of the Tuskegee Airman, perhaps you saw the recent movie about him and these other courageous men. Les, one of the kindest men in the world, received the Congressional Medal of Honor for his service as a Tuskegee Airman during World War II. Les, now in his 90’s, wrote a book of his experiences entitled: “Victory: Tales of a Tuskegee Airman”. 
 


I would like to help Les with the sales of his book. If you are interested in owning a piece of history from a man who was part of it, please contact me, 650-403-6253, to place your order. The cost of the book is $20.00. If you would like to donate an additional $5.00 or more, Les will autograph the book for you. If you’re a history buff, or would just like to help out a man, who has done so much for us, let me know.

Lee Engdahl, Broker 650-403-6253

Excerpt from: VICTORY Tales of a Tuskegee Airman

by Les Williams

"By the time Williams graduated from high school he had to find a way to pay for college tuition. He turned to his passion—tap dancing—and opened a small studio to finance his studies. He graduated from San Mateo Junior College in 1939 but liked teaching dance so much he kept the business going. Then Pearl Harbor was hit. Williams joined his friends—all white—in applying for the Army Air Corps.

“I wanted to serve. I was very patriotic,” he recalls, “And I didn’t want to get drafted because I thought that as a black man I’d be drafted as an infantryman. And I’d seen so many infantrymen after WWI with amputated limbs. Dancing was my life. I thought—I’d rather crash and die than wind up unable to dance. So I set my sights on flying.”

His application was never even processed and he was soon drafted into the lowest level of service: the quartermasters.

To keep his spirits up, he joined fellow quartermasters in a dance troupe—and they were soon performing for officers and visiting dignitaries. It was after one performance that a general congratulated Williams on the show and asked if he could help him in any way. “I immediately said that I wanted to be a pilot,” he recalls.

By the following week, Williams was on his way to Tuskegee Army Air Field in Alabama where an experimental training program for “negroes” had just been established. The military, like much of American society, was segregated and African Americans had not been allowed to fly. The racism that Williams encountered from the white flight instructors was fierce, and the Tuskegee Airmen had to endure a lot of abuse to get through their training."

Copyright © *2012* *Lee Engdahl*, All rights reserved. 430 N. El Camino Real San Mateo, CA 94401

San Mateo county is now experiencing multiple offers again. We are gaining on 2004. This is still the best opportunity we have seen for buyers in years, given the ~3.5% interest rates. I still remember buying a house in 1982 for 17% interest. Given the upswing in commercial rentals, in San Francisco, Bloomberg calls it

Office Space Boom 2.0

and the incredible lack of homes for rent on the peninsula, buyers may miss the boat.

I have been saying since way back in 1987, that this county does not negotiate price much more then between 97 and 103% of list price. This certainly does not mean that all listings sell, but that for a listing to sell it must be priced right. I am aware that many Realtors tend to suggest prices much higher then 103%. I call this buying the listing. They appeal to the seller’s vanity, because all sellers feel their home is the best home on the block. And of course it is for them, or they wouldn’t have purchased it in the first place. But just look at what happened when the inventory fell like a rock this year. I think it speaks for itself.

Condos and Townhouses: Who owns the door?

Many times when describing a condo, I have heard the description, the homeowner owns everything inside the paint. The association owns, and here I am defining “owns” to describe who’s responsible for repairs, the outside paint and of course the commons. Associations are willing to maintain the “commons including painting the doors and walls. Here is the rub: there are lots of things between the paint, in the walls.

In the case I am investigating, the pest operator has called the threshold, door, and door jam as rotting with dry rot, and needs to be removed. He tells the buyer that the subflooring inside the unit feels okay. No rot detected with his probe.

So first, it is moisture that has caused the damage that came from outside, and secondly, it is a particular type of door. The door has windows top to bottom, and is a custom size, smaller then average, and probably requires an association design review to replace with another “look”.

I have learned that in some associations where the door is attached to a townhouse, the association will pay for the door jam and frame, but the actual door is the owner’s responsibility. In other cases where the condo has a specific look, as in this case, the association will own the whole thing as they require a specific type of door.

One more thing for a buyer to think about when purchasing a condo or townhouse, as there is no clear cut answer, unless it is addressed in the association bylaws. Besides doors and windows, there is plumbing, and electrical.

Does your homeowners insurance cover a plumbing leak from the bath tub above your unit? Not necessarily….

Six Must-haves for Mortgage Approval

I saw this article, by Dian Hymer, and liked so much I reproduce it here.

"Interest rates are hovering around historical lows, and low interest rates increase affordability, making it easier for buyers to qualify. Yet stories of buyers waiting months to gain loan approval and home purchase transactions not closing on time due to lender's strict underwriting are all too common.

Some buyers are turned down for illogical reasons. For instance, if you have investments -- even if they're performing well -- an underwriter might deny the mortgage because your portfolio doesn't fall into the underwriter's risk assessment model.

One couple was turned down because the husband had worked at his current job for less than a year -- even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late.

Generally, it's more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you're self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won't lend to buyers who have more than three or four residential properties.

If you're buying a new home before selling your current home, you'll need to have 30 percent equity in your current home. This needs to be verified by the lender's appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month's rent to verify rental income if needed to qualify.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this."

Dian Hymer is a real estate broker with more than 30 years' experience and is a nationally syndicated real estate columnist and author.

Home Affordable Refinance Program (HARP)

The industry’s four largest mortgage servicers all say they will be taking part in the revamped Home Affordable Refinance Program (HARP).

Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program and the changes that will allow more underwater homeowners to refinance at today’s lower interest rates.

Government officials expect the program’s revisions – particularly the GSEs’ waiver on representations and warranties – to increase competition for mortgage refinancing.
An executive with JPMorgan Chase told the company’s investors this week that HARP 2.0 will facilitate “cross-servicing refinancing” because with the rep and warranty waiver, the new lender is not required to assume responsibility for underwriting deficiencies that may have occurred with the original loan.

Chase explains that HARP may be used to replace an adjustable-rate or interest-only loan with a standard fixed interest rate loan, and typically reduces the borrower’s monthly payment.
Frank Bisignano, CEO of mortgage banking at Chase, estimates that with the new HARP guidelines, thousands of Chase customers could lower their mortgage payments by an average of $2,500 a year.
Citi said in an emailed statement that it “supports the program and expects to participate.”
Wells Fargo, likewise, said in a statement that it “welcomes the addition of the new HARP features.”

Veronica Clemons, a spokesperson for Wells Fargo Home Mortgage, says the company is waiting for specific guidelines and requirements from Fannie Mae and Freddie Mac in order to put the changes into practice.

She adds that once the company’s mortgage servicing team has the guidelines in hand, “it will take us some time – depending on the complexity of the guidelines – to make the necessary systems changes to begin offering the new enhancements to our customers.”

The GSEs’ regulator, the Federal Housing Finance Agency (FHFA), says Fannie and Freddie plan to issue guidance with operational details about the HARP changes by November 15th.

“Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers, and other market participants modify their processes,” FHFA said.

Bank of America says it will participate in the enhanced Home Affordable Refinance Program announced by the administration, and it expects the new guidelines and eligibility criteria to go into effect after December 1st.

“Despite ongoing economic challenges, nearly 90 percent of our customers remain current on their mortgage,” BofA spokesperson Rick Simon said. “HARP helps these homeowners who remain current on their mortgage with options to lower their monthly payment when, otherwise, conventional funding options are limited.”

The GSEs have removed the 125 percent loan-to-value (LTV) cap under the program. Now any borrower with an LTV ratio above 80 percent is eligible for a HARP refinance, as long as the loan was sold to Fannie or Freddie prior to May 31, 2009, and the borrower is not delinquent on their payments.

Since HARP was launched in 2009, nearly 900,000 loans have been refinanced through the program. Government officials estimate that an additional 1 million homeowners will receive assistance under the new guidelines.

In its announcement of the program changes, FHFA encouraged borrowers to “contact their existing lender or any other mortgage lender offering HARP refinances.”

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