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Redlands Real Estate Blog

Blog from the Lon Mapes Team at Orangehill Realty

By Lon Mapes | Broker in Redlands, CA
  • Housing Isn't Really Going Gangbusters

    Posted Under: Market Conditions in Redlands, Home Buying in Redlands, Home Ownership in Redlands  |  September 11, 2013 4:31 PM  |  751 views  |  No comments

    Housing isn't really going gangbusters. Despite those eye-popping price jumps, housing is not in a bubble or even a boom. Real estate is also not likely to be the same economic driver it once was, Duncan said. “We are of the view that housing is continuing to grow, but we are not of the view that it is robust,” he told The Times. While home prices have posted double-digit increases this year, those gains are just bounce-backs from very low bottoms. Meanwhile home builders have been slow to acquire land and hire adequate help, and that has made housing’s overall contribution to the economy smaller than it would be otherwise. When construction finally does get humming along at full tilt again, the industry will probably contribute a million fewer jobs than it did during the boom, Duncan said. Those jobs will simply have to come from other parts of the economy.

    PHOTOS: Most affordable Southland ZIP codes for home buyers

    The rise in mortgage interest rates will not choke off the recovery. Economists at Fannie Mae recently studied the relationship between a sharp increase in mortgage-interest rates and home prices. They found there is little correlation between the two. Sales may decline but prices are still likely to increase. Duncan also doesn't expect mortgage-interest rates to surge again. Expect a more gradual increase, he said. “I don’t think that the rate rises will be as sudden as the first piece we saw,” Duncan said.

    Homeownership is the goal but renting has lost its stigma. The homeownership rate has fallen drastically since the boom years, raising questions about whether America will become a rental society. But much of the growth in the rental market has come from the single-family housing market, as investors have snapped up homes and turned those properties into rentals, meaning that former homeowners have tried to re-create their experiences. While the homeownership rate is not likely to rise anytime soon, even those people who lose their homes are likely to become homeowners again. The aspiration to be a homeowner remains unchanged by the crisis, and most renters would still like to own a home, Duncan said.

    It is indeed a good time to buy. Home prices are still down considerably, even though they are up from their bottoms. Mortgage-interest rates are still very low despite the recent spike this year. But you should only buy a house if you can afford it, Duncan said.

    Investors pose a possible risk. Big investors have become a significant factor in the housing market’s recovery. The question is, will new home construction increase supply, just as big investors decide it’s time to sell their holdings? If they were to do so, that could usher in another decline, though not one of the same magnitude as the last housing downturn, Duncan said. Investors should be watching the home builders closely. “If I were them, I would have a close eye on what's actually happening in construction, because that is going to be one form of competition,” Duncan said. Another form of competition for both investors and builders will be homeowners who are freed up to sell their house after spending years "underwater."


    Lon Mapes - Redlands Broker/Owner & Consultant

    Multimillion Dollar Sales Producer
    (909) 648-4091

    http://www.OrangehillRealty.com
    Follow me on Facebook
    http://www.facebook.com/orangehillrealty

  • Top 5 Myths About Home Buying Today

    Posted Under: General Area in Redlands, Home Buying in Redlands, Home Ownership in Redlands  |  September 10, 2013 11:19 AM  |  566 views  |  No comments

    NEW YORK (MainStreet) — The fact is, buying a home today is absolutely, totally different from buying one in 2003. And right there is why so many myths swirl around a process that, in many ways, is utterly novel from what it has been. What was true isn't anymore.

    Be ready to be shocked as we bust some myths below.

    Myth 1: You need a 20% downpayment even to think about buying a home, and that means maybe a couple hundred thousand in cash for a would be Manhattan apartment hunter.

    Totally false. "A down payment can be very low," said Joe Parsons, senior loan officer with PFS Funding, a mortgage banker in Dublin, Calif. "There are conventional loans requiring just 3% for a down payment or even zero - the VA home loan program for veterans will cover 100% of the purchase price."

    Maybe five years ago, in the belly of the beast of the mortgage meltdown, 20% was in fact a necessity, but today most lenders are way more flexible. And if yours isn't, go elsewhere.

    Myth 2: Only those with golden credit need apply for home mortgages.

    Rubbish. The past half dozen years have been rough. High unemployment, a housing implosion, you know the realities. So do lenders, and an upshot is a heightened willingness to overlook past pecadilloes such as a foreclosure.

    "Credit dings and blemishes, even a bankruptcy, short sale or foreclosure do not prevent you from getting a loan, even with a very low down payment such as 3.5% for an FHA loan," said Bruce Ailion, a realtor with RE/MAX in Georgia.

    A new FHA initiative called "Back to Work" explicitly cuts the time to qualify for a new mortgage after a foreclosure, bankruptcy or similar to as little as one year for borrowers who can prove their past financial difficulties were due to extenuating circumstances out of their control.

    Myth 3: Fixed rate mortgages are the only way to go.

    Not true, said David Reiss, a professor at Brooklyn Law School who specializes in real estate. He elaborated: "The necessity of getting a 30-year fixed rate mortgage is one of the biggest myths about homebuying. The average American household stays in their home for about seven years. Typically, 30-year fixed rate mortgages have higher interest rates than adjustable rate mortgages (ARMs). Homebuyers should take a hard look at their plans for the new home."

    Only 6.5% of applications for mortgages in a recent period were for ARMs, according to the Mortgage Bankers Association. A typical ARM went out at 3.21% interest, versus 4.69% for a typical 30 year fixed rate. That adds up to a difference worth tens of thousands of dollars over, say, a seven year probable life of the loan.

    Do the math.

    Myth 4: Cut out the realtor, rep yourself and you will save a fast 3%.

    That is just about never true.

    The realtor's commission - 5 or 6 % in most of the country - is paid by the seller. In most contracts that realtor agrees to "co-broke," which means he or she will split his commission with a buyer's agent.

    Explained Sam DeBord, a broker with Coldwell Banker Danforth in Washington State: "Most listing agents sign a contract with the seller for a certain commission percentage - for example, 6%. They offer to share a portion of that if a cooperating buyer's agent enters the picture - for example, 3% - but if there is no buyer's agent involved, the full 6% is still paid by the seller to the listing agent."

    The buyer has absolutely no say in this, at least in theory.

    Could a tenacious and persuasive buyer negotiate, say, a 1% cut in the selling price by self representing? Probably.

    But saving the full 3% just isn't going to happen, said multiple sources.

    Myth 5: If you can, you should buy a home right now.

    Very probably homes will be a strong investment over the next 10 to 20 years, mainly because in most markets prices have been savaged compared to 2005 through 2007 highs. What goes down goes up and the same will be true with housing.

    However there are plenty of reasons why renting is the better choice for many. It's flexible. There's little commitment. Take a new job in a different part of the country, and it's usually easy and low cost to move on.

    There also is no knowing how long recovery will take for housing where you live, and in some parts of the nation, experts predict it will be another 20 years before the 2006 highs are hit again.

    "Just because you can afford to buy a home, doesn't mean you should," said Steven Alexander, the president of Private Mortgage Services, a division of Private Bank of Buckhead in Atlanta. "There are many factors that need to be considered before making that type of commitment. Do I have the time and financial wherewithal to maintain a home? How long do I plan to stay?"

    Home buying makes sense. Often. But it is not a financial fast track to wealth. Know that, and the decisionmaking gets that much easier.


    Lon Mapes - Redlands Broker/Owner & Consultant

    Multimillion Dollar Sales Producer
    (909) 648-4091

    http://www.OrangehillRealty.com
    Follow me on Facebook
    http://www.facebook.com/orangehillrealty

  • Eight Ways to Improve Your Home Appraisal

    Posted Under: General Area in Redlands, Home Selling in Redlands, Home Ownership in Redlands  |  April 30, 2013 8:36 AM  |  459 views  |  2 comments
    When Kellie and Michael May decided to refinance their home in the New York suburbs, they wanted to take advantage of historically low interest rates. But before landing a new 30-year fixed-rate mortgage, they had to get through a home appraisal.

    "It was a major stumbling block," says Kellie May, who has owned the 4-bedroom, 3-bath colonial for seven years. Not that she and her husband were unprepared; they'd been through an appraisal for another refinance in 2010, so they knew to point out improvements they'd made to the 3,400 square foot home, and supply prices for other neighborhood properties that had sold recently.

    But the appraisal came back roughly $70,000 less than the $1,230,000 the Mays were expecting, and too low to support their new loan.

    They responded with a paperwork arsenal aimed at their lender, asserting that the appraisal had been based on faulty recent sales data. The loan squeaked through, after the bank crafted an exception for the Mays. It was able to do that because their loan was a jumbo loan, not subject to the more rigid underwriting standards they would have encountered if it were a conventional loan aimed at secondary buyers like Fannie Mae and Freddie Mac.

    Low appraisals are becoming a bigger problem for many would-be buyers and refinancers as home values have started to stabilize and rise in some markets.

    In Leesburg, Florida, for example, low appraisals have caused the cancellation of as many as 15 percent of home sales for local real estate broker Gus Grizzard.

    "We are seeing higher price appreciation and are starting to run into appraisal problems," said Charlie Young, chief executive officer of ERA Franchise Systems, a firm with a national network of real estate brokerage offices, including Grizzard's. The National Association of Realtors reported on Tuesday that inventories of homes were low and the median price a home resale was, at $180,800 in December, up 11.5 percent in a year.

    Appraisals are based on recent sales prices of comparable properties. And in rising price markets, those sales prices might not be high enough to support the newest deals. Young said there were many places in California reporting appraisal problems.

    On Friday, the federal government issued new rules aimed at improving the appraisal process as it pertains to high-interest mortgages on rapidly appreciating homes.

    But those rules don't go into effect for a year, and don't apply to most conventional loans. It pays to protect your own loan before the bank even thinks about sending that guy with the clipboard over to your house.

    "The reality is that the appraiser is only there for 30 minutes at most," says Brian Coester, chief executive of CoesterVMS, a nationwide appraisal management company based in Rockville, Maryland. "The best thing a homeowner can do to get the highest appraisal possible is make sure they have all the important features of the home readily available for the appraiser."

    Here are eight ways you can bolster your appraisal:

    MAKE SURE APPRAISER KNOWS YOUR NEIGHBORHOOD

    Is the appraiser from within a 10-mile radius of your property? "This is one of the first questions you should ask the appraiser," says Ben Salem, a real estate agent with Rodeo Realty in Beverly Hills, California.

    He recalled a recent case where an appraiser visited an unfamiliar property in nearby Orange County and produced an appraisal that Salem said was $150,000 off. "If the appraiser doesn't know the area intimately, chances are the appraisal will not come back close to what a property is really worth."

    You can request that your lender send a local appraiser; if that still doesn't happen, supply as much information as you can about the quality of your neighborhood.

    PROVIDE YOUR OWN COMPARABLES

    Provide your appraiser with at least three solid and well-priced comparable properties. You will save her some work, and insure that she is getting price information from homes that really are similar to yours.

    Websites including Realtor.com, Zillow and Trulia offer recent sales prices and details such as the number of bedrooms and bathrooms in a home.

    KNOW WHAT ADDS THE MOST VALUE

    If you're going to do minor renovations, start with your kitchen and bathrooms, says G. Stacy Sirmans, a professor of real estate at Florida State University. He reviewed 150 variables that affect home values for a study sponsored by the National Association of Realtors. Wood floors, landscaping and an enclosed garage can also drive up appraisals.

    DOCUMENT YOUR FIX-UPS

    If you've put money into the house, prove it, says Salem.

    "Before-and-after photos, along with a well-defined spreadsheet of what was spent on each renovation, should persuade an appraiser to turn in a number that far exceeds what he or she first called out."

    Don't forget to highlight all-important structural improvements to electrical systems, heating and cooling systems - which are harder to see, but can dramatically boost an appraisal. Show receipts.

    TALK UP YOUR TOWN

    If your town has recently seen exciting developments, such as upscale restaurants, museums, parks or other amenities, make sure your appraiser knows about them, says Craig Silverman, principal and chief appraiser at Silverman & Co. in Newtown, Pennsylvania.

    DISTINGUISH BETWEEN UPSTAIRS AND DOWNSTAIRS

    Many homeowners covet that refinished basement, but that doesn't mean appraisers look at it the same way. "Improvements and additions made below grade, such as a finished basement, do not add to the overall square footage of your house," says John Walsh, president of Total Mortgage Services in New York. "So they don't add anywhere near as much value as improvements made above grade."

    According to Remodeling magazine, a basement renovation that cost $63,000 in 2011-12 will recoup roughly 66 percent of that in added home value. That's not as good as an attic bedroom, which will recoup 73 percent of its cost. Even similar bedrooms typically count for more if they are upstairs instead of downstairs.

    CLEAN UP

    Even jaded appraisers can be swayed by a good looking yard. "Tree trimming, cleaning up, a few flowers in the flower beds and paint touch up can all help the appraisal," says Agnes Huff, a real estate investor based in Los Angeles.

    That advice holds true indoors, too. "Get rid of all the clutter in your home," says Jonathan Miller, a longtime appraiser in New York. "It makes the home appear larger."

    GIVE THE APPRAISER SOME SPACE

    Don't follow the appraiser around like a puppy. "I can't tell you how many homeowners or listing agents follow me around in my personal space during the inspection," he says. "It's a major red flag there is a problem with the home."

    And while you're at it, make the appraiser's job as pleasant as possible by giving your home a pleasant smell. At a minimum, clean out the litter box. Baking some fresh cookies and offering him one or two probably won't sway your appraisal, nor should it. But it couldn't hurt.


    Lon Mapes - Redlands Broker/Owner & Consultant

    Multimillion Dollar Sales Producer
    (909) 726-5935

    http://www.OrangehillRealty.com
    Follow me on Facebook
    http://www.facebook.com/orangehillrealty

  • Home Prices: Biggest Rise Since Housing Bubble

    Posted Under: Market Conditions in Redlands, Agent2Agent in Redlands, Home Ownership in Redlands  |  April 2, 2013 8:24 AM  |  531 views  |  No comments

    Home prices posted their biggest gain since 2006 in January.

    The S&P Case-Shiller index, which tracks the 20 largest markets in the nation, showed the biggest year-over-year gain in prices since June 2006.

    Related: 5 best markets to buy a home

    In a separate government report Tuesday, new homes sold at a 411,000 annual rate in February, down nearly 5% from the January sales pace but up 12% from year-earlier levels. The typical price of a new home sold in the month was $246,800, up about 3% from both the January and a year earlier.

    Joseph LaVorgna, chief U.S. economist for Deutsche Bank, said that bad weather in February could be partly responsible for the slowdown in sales. But he said market fundamentals suggest that the market for new-home sales should remain strong.

    "Despite the pullback in sales in February, the uptrend in housing remains clearly intact," he said. He is forecasting even stronger sales in the second half of this year.

    The Case-Shiller report shows the recovery in home prices is widespread. All 20 markets posted a year-over-year gain, and the pace of increase picked up in every market except Detroit.

    Some of the markets hurt the most by the bursting of the housing bubble have enjoyed the biggest gains, led by a 23% rise in Phoenix. Prices were also up more than 10% in San Francisco, Las Vegas, Detroit, Atlanta, Minneapolis, Los Angeles and Miami, all markets that had been hit hard by foreclosures.

    New York posted the smallest rise, up only 0.7%.

    Even with the recent rise in home prices, the overall index is down 28.4% from the 2006 peak.

    Related: Big money betting big on housing

    But experts say they see a lot of strength in the current market.

    "The market still has a long way to go nationally, but the healing process -- and a return to a normalized housing market -- is definitely well underway," said Jim Baird, chief investment officer for Plante Moran Financial Advisors.

    Home prices have been helped in recent months by a number of factors, including tight inventory of homes available for sale, near record-low mortgage rates and a drop in homes in foreclosure. A decline in unemployment is also helping the housing recovery.

    The housing recovery itself is helping support overall economic growth, as builders scramble to hire workers to meet the renewed demand. The lift goes beyond the impact of increased construction on the economy, as the rise in home prices lifts household wealth.

    Rising home prices also reduce the number of people owing more on their mortgages than their homes are worth. That, in turn, can help them to refinance those loans at a lower rate, freeing up money to spend on other goods and services.


    Lon Mapes - Redlands Broker/Owner & Consultant

    Multimillion Dollar Sales Producer
    (909) 726-5935

    http://www.OrangehillRealty.com
    Follow me on Facebook
    http://www.facebook.com/orangehillrealty

  • Eight Ways to Improve Your Home Appraisal

    Posted Under: Market Conditions in Redlands, Home Selling in Redlands, Home Ownership in Redlands  |  March 12, 2013 10:45 AM  |  324 views  |  No comments

    When Kellie and Michael May decided to refinance their home in the New York suburbs, they wanted to take advantage of historically low interest rates. But before landing a new 30-year fixed-rate mortgage, they had to get through a home appraisal.

    "It was a major stumbling block," says Kellie May, who has owned the 4-bedroom, 3-bath colonial for seven years. Not that she and her husband were unprepared; they'd been through an appraisal for another refinance in 2010, so they knew to point out improvements they'd made to the 3,400 square foot home, and supply prices for other neighborhood properties that had sold recently.

    But the appraisal came back roughly $70,000 less than the $1,230,000 the Mays were expecting, and too low to support their new loan.

    They responded with a paperwork arsenal aimed at their lender, asserting that the appraisal had been based on faulty recent sales data. The loan squeaked through, after the bank crafted an exception for the Mays. It was able to do that because their loan was a jumbo loan, not subject to the more rigid underwriting standards they would have encountered if it were a conventional loan aimed at secondary buyers like Fannie Mae and Freddie Mac.

    Low appraisals are becoming a bigger problem for many would-be buyers and refinancers as home values have started to stabilize and rise in some markets.

    In Leesburg, Florida, for example, low appraisals have caused the cancellation of as many as 15 percent of home sales for local real estate broker Gus Grizzard.

    "We are seeing higher price appreciation and are starting to run into appraisal problems," said Charlie Young, chief executive officer of ERA Franchise Systems, a firm with a national network of real estate brokerage offices, including Grizzard's. The National Association of Realtors reported on Tuesday that inventories of homes were low and the median price a home resale was, at $180,800 in December, up 11.5 percent in a year.

    Appraisals are based on recent sales prices of comparable properties. And in rising price markets, those sales prices might not be high enough to support the newest deals. Young said there were many places in California reporting appraisal problems.

    On Friday, the federal government issued new rules aimed at improving the appraisal process as it pertains to high-interest mortgages on rapidly appreciating homes.

    But those rules don't go into effect for a year, and don't apply to most conventional loans. It pays to protect your own loan before the bank even thinks about sending that guy with the clipboard over to your house.

    "The reality is that the appraiser is only there for 30 minutes at most," says Brian Coester, chief executive of CoesterVMS, a nationwide appraisal management company based in Rockville, Maryland. "The best thing a homeowner can do to get the highest appraisal possible is make sure they have all the important features of the home readily available for the appraiser."

    Here are eight ways you can bolster your appraisal:

    MAKE SURE APPRAISER KNOWS YOUR NEIGHBORHOOD

    Is the appraiser from within a 10-mile radius of your property? "This is one of the first questions you should ask the appraiser," says Ben Salem, a real estate agent with Rodeo Realty in Beverly Hills, California.

    He recalled a recent case where an appraiser visited an unfamiliar property in nearby Orange County and produced an appraisal that Salem said was $150,000 off. "If the appraiser doesn't know the area intimately, chances are the appraisal will not come back close to what a property is really worth."

    You can request that your lender send a local appraiser; if that still doesn't happen, supply as much information as you can about the quality of your neighborhood.

    PROVIDE YOUR OWN COMPARABLES

    Provide your appraiser with at least three solid and well-priced comparable properties. You will save her some work, and insure that she is getting price information from homes that really are similar to yours.

    Websites including Realtor.com, Zillow and Trulia offer recent sales prices and details such as the number of bedrooms and bathrooms in a home.

    KNOW WHAT ADDS THE MOST VALUE

    If you're going to do minor renovations, start with your kitchen and bathrooms, says G. Stacy Sirmans, a professor of real estate at Florida State University. He reviewed 150 variables that affect home values for a study sponsored by the National Association of Realtors. Wood floors, landscaping and an enclosed garage can also drive up appraisals.

    DOCUMENT YOUR FIX-UPS

    If you've put money into the house, prove it, says Salem.

    "Before-and-after photos, along with a well-defined spreadsheet of what was spent on each renovation, should persuade an appraiser to turn in a number that far exceeds what he or she first called out."

    Don't forget to highlight all-important structural improvements to electrical systems, heating and cooling systems - which are harder to see, but can dramatically boost an appraisal. Show receipts.

    TALK UP YOUR TOWN

    If your town has recently seen exciting developments, such as upscale restaurants, museums, parks or other amenities, make sure your appraiser knows about them, says Craig Silverman, principal and chief appraiser at Silverman & Co. in Newtown, Pennsylvania.

    DISTINGUISH BETWEEN UPSTAIRS AND DOWNSTAIRS

    Many homeowners covet that refinished basement, but that doesn't mean appraisers look at it the same way. "Improvements and additions made below grade, such as a finished basement, do not add to the overall square footage of your house," says John Walsh, president of Total Mortgage Services in New York. "So they don't add anywhere near as much value as improvements made above grade."

    According to Remodeling magazine, a basement renovation that cost $63,000 in 2011-12 will recoup roughly 66 percent of that in added home value. That's not as good as an attic bedroom, which will recoup 73 percent of its cost. Even similar bedrooms typically count for more if they are upstairs instead of downstairs.

    CLEAN UP

    Even jaded appraisers can be swayed by a good looking yard. "Tree trimming, cleaning up, a few flowers in the flower beds and paint touch up can all help the appraisal," says Agnes Huff, a real estate investor based in Los Angeles.

    That advice holds true indoors, too. "Get rid of all the clutter in your home," says Jonathan Miller, a longtime appraiser in New York. "It makes the home appear larger."

    GIVE THE APPRAISER SOME SPACE

    Don't follow the appraiser around like a puppy. "I can't tell you how many homeowners or listing agents follow me around in my personal space during the inspection," he says. "It's a major red flag there is a problem with the home."

    And while you're at it, make the appraiser's job as pleasant as possible by giving your home a pleasant smell. At a minimum, clean out the litter box. Baking some fresh cookies and offering him one or two probably won't sway your appraisal, nor should it. But it couldn't hurt.


    Lon Mapes - Redlands Broker/Owner & Consultant

    Multimillion Dollar Sales Producer
    (909) 726-5935

    http://www.OrangehillRealty.com
    Follow me on Facebook
    http://www.facebook.com/orangehillrealty
  • Record Number (32.4%) of All California Homes Bought with Cash

    Posted Under: Market Conditions in California, Home Buying in California, Home Ownership in California  |  February 11, 2013 2:06 PM  |  759 views  |  No comments
    The number of California homes purchased with cash reached an all-time high last year, the result of high investor interest, a difficult mortgage environment, and perceived higher returns on investment, a real estate information service reported. A total of 145,797 condos and houses were bought without mortgage financing in 2012, a record. That was up from 125,812 in 2011, the previous high. In 2007, as the housing market deflated, cash sales totaled 39,731, according to San Diego-based DataQuick.

    "It's clear that a lot of today's housing market recovery is being fueled by people putting their own money into homes. Some cash buying is part of a normal housing market, but we're at twice that normal rate. There are always some rich people, also buyers from abroad, but in a normal market the biggest single category would be retirees and empty-nesters who are down-sizing. Today, a lot of buyers are chasing what they view as the deal of a lifetime," said John Walsh, DataQuick president.

    Cash purchases accounted for a record 32.4 percent of California's overall home sales last year, up from 30.4 percent in 2011 and more than double the annual average of 15.6 percent since 1991, when DataQuick's cash statistics begin.

    "I'm sure a lot of today's cash buyers would love to take advantage of the current low mortgage interest rates, but since the 'loans-gone-wild' days of 2004-2006, the lending pendulum has swung to the opposite end of the spectrum. Even a lot of well-qualified buyers can't get loans.

    While the market overall is improving, sales levels are still below average, and prices much closer to the bottom than to the peak," he said. Last year a total of 447,573 homes were sold in California to all buyers, whether they used a loan or cash.

    While up from the cyclical low of 383,748 sales in 2007, last year's total was well below the peak of 775,831 sales in 2004, and it was about 13 percent below the state's average annual home sales since 1988. The median price paid for a California home, whether financed or bought with cash, was $275,000 in 2012, up 10.0 percent from $250,000 in 2011.

    The annual median peaked at $469,500 in 2006, and bottomed out at $245,000 in 2009. Around half of the median's peak-to-trough drop can be attributed to shifts in market mix. DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

    Cash buyers paid a median $205,000 last year, up 17.1 percent from $175,000 in 2011. Buyers who financed with a mortgage paid a median $305,000 in 2012, up 10.5 percent from $276,000 a year earlier, DataQuick reported.

    Last year more all-cash deals occurred above the $500,000 threshold, and fewer below $100,000. Cash-only purchases of $500,000 or more rose 35.0 percent compared with 2011. That compares with an 11.2 percent decline in the number of homes cash buyers purchased below $100,000.

    Some buyers in the mid- to high-priced markets used cash either because they couldn't qualify for a loan or wanted to better their chances of prevailing in bidding situations. It's likely that in the sub-$100,000 market cash-paying investors simply couldn't find enough homes for sale in that price range.

    Inventory in affordable neighborhoods has generally been low because foreclosures have slowed, meaning less supply, and many people in these areas still owe more than their homes are worth, hence they can't sell. Investors and vacation-home buyers bought roughly 55 percent of all homes purchased with cash last year.

    Multi-home buyers, meaning those purchasing two or more properties, accounted for about 28 percent of last year's cash sales, up from around 24 percent in 2011, according to an analysis of buyer names in the public record.

    Last year more than 11,700 cash-paying, multi-home buyers collectively purchased about 41,450 homes. Compared with 2011, that marked a nearly 19 percent increase in the number of multi-home buyers and a roughly 36 percent jump in the number of homes they bought.

    In 2012, individual investors or partnerships paying cash bought as many as 1,300 homes, although the vast majority (88 percent) of these multi-home cash buyers bought fewer than five, and 65 percent bought two.

    While cash purchases are up in all areas, there are regional differences. For example, in San Mateo County 24.2 percent of the purchases were cash, while in Merced County it was 42.9 percent. Among the California zip codes with at least 100 sales last year, the two with the highest cash purchase rate were in Orange County's Laguna Woods 92637, with 74.0 percent of the homes sold going to cash buyers, and Riverside County's Indian Wells 92210, with 71.6 percent.

    Cash: Number of homes bought with no mortgage financing
    Community2011 2012 % Chng
    Los Angeles 19,58024,68826.1%
    Orange 8,34610,76028.9%
    San Diego 9,85713,05232.4%
    Riverside 14,22015,5599.4%
    San Bernardino 10,41810,9545.1%
    Ventura 1,9332,45727.1%
    Imperial 538501-6.9%
    Southern California 64,89277,97120.2%
    San Francisco 1,3721,81632.4%
    Alameda 4,2414,98617.6%
    Contra Costa 5,2465,7669.9%
    Santa Clara 4,6255,41517.1%
    San Mateo 1,6941,94815.0%
    Marin 7581,16854.1%
    Solano 2,2912,53510.7%
    Sonoma 1,7112,12224.0%
    Napa 35449038.4%
    Bay Area 22,29226,24617.7%
    Santa Cruz 55373933.6%
    Santa Barbara 9501,25732.3%
    San Luis Obispo 89899811.1%
    Monterey 1,1241,24110.4%
    Coast 3,5254,23520.1%
    Sacramento 7,8949,10115.3%
    San Joaquin 3,5413,5510.3%
    Placer 2,0242,38617.9%
    Kern 3,8753,9241.3%
    Fresno 3,3263,307-0.6%
    Madera 798723-9.4%
    Merced 1,4591,217-16.6%
    Tulare 1,6801,7192.3%
    Yolo 50561020.8%
    El Dorado 9349916.1%
    Stanislaus 2,6802,553-4.7%
    Kings 4154334.3%
    San Benito 13917324.5%
    Yuba 31136417.0%
    Colusa 6110775.4%
    Sutter 36249035.4%
    Central Valley 30,00431,6495.5%
    Mountains* 1,8692,17616.4%
    North Calif* 3,2303,5209.0%
    Statewide* 125,812145,79715.9%
    includes additional counties


    Lon Mapes - Redlands Broker/Owner & Consultant

    Multimillion Dollar Sales Producer
    (909) 726-5935

    http://www.OrangehillRealty.com
    Follow me on Facebook
    http://www.facebook.com/orangehillrealty
  • Consumer Groups Criticize New Mortgage Rules

    Posted Under: Market Conditions in Redlands, Financing in Redlands, Home Ownership in Redlands  |  January 21, 2013 5:21 PM  |  403 views  |  No comments

    New rules from the Consumer Financial Protection Bureau aim to make mortgages safer for borrowers, but consumer groups argue that the rules offer more protection for lenders than benefits for borrowers.


    The new rules, released Thursday, include an "ability-to-repay" provision that prohibits lenders from issuing mortgages to people who are unable to prove they can afford the loans. But, consumer advocates charge, the rules also provide a legal shield for banks that is detrimental to borrowers.

    When a loan meets the new lending criteria outlined by the CFPB, it will become a "qualified mortgage," which will protect banks from lawsuits filed by aggrieved borrowers or buyers of mortgage-backed bonds.

    The qualified mortgage standards invite abusive lending and erode the progress made by
    Dodd-Frank, according to Alys Cohen, the staff attorney for the National Consumer Law Center. Lenders can issue mortgages that are unaffordable in practice but still meet the guidelines meant to demonstrate an ability to repay, she said.

    Lenders will still be able to issue loans to people in which mortgage debt can comprise as much as 43% of their pre-tax income, for example. For someone earning $10,000 a month that doesn't create much of an issue. But for someone earning $1,000 a month, putting 43% of their income toward housing costs would leave them almost nothing for other living expenses.

    So even though the loan would comply with the ability-to-repay rule, the borrower would still not be able to make their mortgage payments. They could lose their home, destroy their credit rating and still not be able to sue their lender.

    John Taylor, president of the community activist group, the National Community Reinvestment Coalition, fought against the safe harbor provision. He thought borrowers should be able to sue lenders if they knowingly put them into unsustainable mortgages.

    "I thought it was unnecessary to create the legal protection," he said. "[Now that the lenders have it, though,] the major excuse for not lending is removed and I'm looking forward to seeing if there's a massive amount of loans being made available."

    According to lenders, the legal protections will give them more confidence to open up the purse strings.

    For Camden Fine, CEO of the Independent Community Bankers of America, the legal protection is a significant win for its members.

    Many attorneys threaten to bring nuisance suits against community banks on behalf of borrowers over minor filing errors, he said. The new rules should end that.

    Yet, some industry insiders are skeptical that this will propel mortgage lending. It does nothing to ease underwriting standards, which lenders have strictly observed the past few years.

    "The regulation sets strong standards to demonstrate a borrower's ability to repay a loan and consumers will have to meet those standards," said Paul Leonard of the Financial Services Roundtable.


    Lon Mapes - Redlands Broker/Owner & Consultant

    Multimillion Dollar Sales Producer
    (909) 726-5935

    http://www.OrangehillRealty.com
    Follow me on Facebook
    http://www.facebook.com/orangehillrealty
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