Archive for August, 2008
August 28, 2008
This week brought the latest Case-Shiller report, with data being crunched from June of this year. The monthly report, which tracks changes in the value of residential housing, covers 20 metropolitan areas in the United States, with three of those being in California: San Francisco, Los Angeles, and San Diego.
Overall, housing values are down 2.3% over May of 2008. Some of the cities, however, are showing a bit of a rebound, with 9 of the markets having a positive change in the last month. While none of the California cities took top honors, Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Minneapolis, and New York fared better than the rest. As for our sunshine state, Los Angeles is down 1.4% over last month and 25.3% over this time last year; San Diego is down 1.5% over last month and 24.2% over last year; and, San Francisco is down 1.8% and 23.7%, respectively.
Currently the biggest losers in the game over the last year are Las Vegas (-28.6%), Phoenix (-27.8%) and Miami (-28.3%), with Charlotte (-1%), Dallas (-3.2%) and Denver (-4.7%) on the winning end, so to speak.
August 23, 2008
Given these economic times, most homeowners rely on public schools for their children’s education. Private and parochial schools can just be a bit too pricey on top of the mortgage. So if you are in the market for a house and you have or are anticipate having children, buying in a good school district is usually of utmost importance. I remember my brother looking for a home in the Los Angeles area and debating whether they should buy a cheaper home in a less-desirable school district and send their kids to private school or buy a more expensive home in a really good school district. He chose to put the money in the house, since a parochial education wasn’t absolutely necessary to him and his wife. Not only has his house appreciated more rapidly than in other cities he considered, his kids are getting a top-notch education.
The same can be said for the Bay Area, but a few words of caution. While many school districts are still using the traditional neighborhood school system, others have developed a magnet school program where you can choose where your child goes, based on the academic theme of the school (science, math, computer, arts, etc). While this program has its good points, you do not always get your first choice of schools and could end up schlepping across town twice a day. Make sure you are familiar with which system is used so that you don’t purchase a home assuming that the school two blocks asay will be where your children go.
As for the measurement of a school’s performance, word of mouth can go a long way, but many rely on the state’s STAR program. The STAR Program administers annual California Standards Tests (CSTs) to schools throughout California. The CSTs are primarily multiple choice tests in English, math, science and history/social sciences, with a writing component for forth and seventh grade students only. These tests were developed specifically to assess students’ knowledge of the California content standards adopted by the State Board of Education. Not every grade takes all four tests every year. English testing is done in grades 2-11, math 2-11, science only grades 5, 8, and 10, and history/social science in grades 8 and 11. Last week the 2008 scores were published and available online.
From these scores, an Academic Performance Index (API) is developed, giving each school a score and a ranking among similar schools throughout the state. The scores also allow educators to measure Adequate Yearly Progress (AYP) and Program Improvement (PI), all of which add up to the Accountability Progress Reports (APR). (Apparently educators also love the use of initialisms, which I will try to avoid for the rest of this post.)
For an accounting by county, district or school, you can go to the Department of Education’s website. This will give you a starting point to either zoom in on specific schools or learn which maybe should be avoided.
August 22, 2008
I was wondering if you might want to make a journey with me. It’s bound to take some time—maybe 6 to 9 months. Where are we going, you ask? I anticipate a trip through remodeling hell. That’s right, folks, I’m in need of a new kitchen and I hardly know where to begin. Given my relative lack of knowledge and the research I’ll need to do, I thought it might be helpful if I shared the thought, planning, and construction process with all of you. I fully expect it to be a bumpy ride, full of potholes, missteps and missed opportunities. But I think we can all learn from this process together and maybe you can even provide some wisdom that will help me as we proceed. (Other than to hire a competent but unaffordable architect or designer.)
I don’t undertake this project lightly. My kitchen is tied to my livelihood and having it torn up and unusable for any period of time will make my [other] job as a food columnist infinitely more difficult. (I might just need to rotate through all your kitchens to do my recipe testing.) So it is important to me to do all the research and make all the decisions and purchases prior to starting any demolition.
My husband and I have not yet settled on a budget, and that ought to be an interesting discussion. In any event, it is not likely to be enough to put the project into the capable of hands of a professional to design. (We will, of course, hire professional contractors to do the work.)
I don’t anticipate any drastic changes, such as pushing a wall out onto the porch, or removing the wall to the dining or living room, but it will be a complete demo—cabinets, most appliances, and the floor. The configuration will remain very close to the existing design, so I hope that will make things go more smoothly (ever the optimist). But who knows? Maybe I’ll be inspired along the way and do something radical. We’ll just have to wait and see…..
August 13, 2008
That’s right, folks, I am taking today’s news round-up and playing cheerleader for Redfin.
What’s all the rah-rah about? The programmers have come up with yet another release, updating the already awesome Redfin search engine to V. 4.8. I swear, they must lock those guys and gals in a basement with chains, feeding them only brain food until they come up with something new and amazing. Which they always do.
Redfin is committed to providing you with the best and most accurate information in a timely fashion. They are also generous enough to fund the Sweet Digs blogs, keeping their hands off of what we independent contractors write and report on, so I do feel a duty to them to report on this type of update. But, more importantly, I feel an obligation to you, our readers, to let you know what is available and what can help you in your search for a home or to sell a home. And I still believe that Redfin is the best online site to do that.
What’s new this time around? The full explanation can be found over at the corporate blog, along with graphics, but the basics are:
- Neighborhood Pages: This is, by far, the best addition ever. (See sample below) This feature allows you to drill down into neighborhoods on a number of levels, showing newest homes listed, upcoming open houses, reduced-price properties, and most and least expensive in an area—all accessible from one page. In addition to neighborhood name search, you can search by zip code and city. There is also market data, school information, and links to city level blogs and forums.
- Zillow FSBO feed: This is a great new feature because Zillow FSBO listings are more in-depth than any realtors. There are usually more pictures, and a long description from the homeowners themselves.
- Improved Favorites: more sort features, maps, driving instructions. Great for organizing homes for tours.
- 4.8 Buttons: When reviewing a property page, over in the sidebar My Redfin section are new buttons for adding to the listing to favorites, sharing it on Facebook, getting directions, and more.
- Improved Tour Integration: this now includes a shopping cart to load up homes to go and see.
- Announcement Bar Across the top of the Map Search Screen: This will give you updated news, but it can be turned off with one click, and will not reappear until there is a new announcement message.
So, head on over and take a test drive. Let us know what you think.
August 12, 2008
I don’t tend to spend a lot of time checking out the International Listings website, because their clientele is a bit different from ours. They market luxury homes around the world, like this multi-level villa outside Athens. Not that I don’t like to dream now and then, but really, what’s the point with the market being what it is. But a while back this website for high-end homes did a great service that just might come in handy with strapped sellers: they did a blog post on Tips and Resources for the Upside-Down Homeowner. In fact, the post contains 101 tips in 9 categories, which include:
- Getting Ready to Sell
- FSBO in a Down Market
- Dealing with Realtors
- Refinancing
- Avoiding Foreclosure
- Avoiding Bankruptcy
- Rent Your Home (or a portion of it)
- Weather It Out
- Invest in Your Home
While not all the tips are great, it could be a great list to read to get a seller thinking about what needs to be done. And since July was another bad month for foreclosures in our fair state, we can probably use all the help we can get.
August 8, 2008
We have, as a society, evolved from hunting wild game to hunting for bargains. Some people consider it an art form, an obsession, a way of life. Many will cut coupons, others scour the sale ads in the newspaper, and the internet is full of discounted items, made available to you because a costly storefront is not required. The one place it can be difficult to spot bargains is real estate. I’m talking true bargains. Homes are big-ticket items and coupons do not apply. You can watch for price reductions, which is one way to ascertain a bargain, but its not like toilet paper, there is not an inexhaustible supply. There is only one house at that one price at that one address. If you wait too long, poof!, it’s gone.
So the brain trust at Redfin did a study, published this week on their site The Real Estate Scientist. This study is about buyers who are looking to negotiate a discount off a home’s asking price. With so much volatility in the market, anxious buyers aren’t sure whether they can get 10% off asking price or 3% (which in turn creates a lot of problems for ALL real estate agents trying to guide clients).
The computer scientists analyzed 9,053 single-family homes in three of Redfin’s markets: Fairfax, Los Angeles, and King (Seattle) counties. Data from April 15, 2008 to June 15, 2008 was used to identify the traits of the homes where the sellers accepted the biggest discounts (i.e. the sales that were in the top ten percentile of discount off asking price – which turned out to 11.4% off list; the average for all home sales was 2.5%).
The final results of the study are 7 pages, downloadable in pdf format from this page and well worth your time if you are looking to buy a home. In fact they were worthy enough to be featured on Good Morning America and the front page of the Seattle Times. Below are a few of the basic statistics that the real estate scientists found:
Where the big discounts were more likely to be found:
- 83% more likely to be 90+ days on market
- 73% more likely to be described as fixer-uppers
- 52% more likely to have seen seller-owned for more than 20 years, but 9% more likely to be seller-owned for less than five year
- 28% more likely to have already dropped in asking price
- 9% more likely to involve a bank
- 20% LESS likely to be a remodel
It’s not surprising that a home long on the market gets a bigger discount, and fixer-uppers are a hard sell. What is surprising is that 3rd statistic. We think of big discounts as coming from short sales or REOs, but I think, in general, that those homes may start out priced very low, so further discounts are not as available. With long-term owners, particularly seniors, a home is likely to need updating, and there is no mortgage to pay off, so they can afford to lower the price and are willing to do so to sell.
Go check out the results of all the number crunching. Reading the report doesn’t take that long, and it could save you thousands of dollars.
August 6, 2008
Well, it’s nice to know that even if we urban- and suburbanites are suffering, that the farmers have something to smile about. The long-suffering backbone of this nation, farmers have been faced with falling food prices, higher feed prices, and many have lost their land to corporate farming. FarmAid aside, the best news to hit growers and ranchers is that “U.S. Farmland Values Reach Record on High Crop Prices.” Alan Bjergaa over at Bloomberg.com reports on the increase taking place across the country.
On the flip side, we are seeing prices tumble and large amounts of homes going into foreclosure on the outer finges of urban areas. Places like Solano County in the Bay Area experienced a growth spurt in the last 5-10 years, with large housing developments going up on what was previously farmland. City dwellers could get a bigger house with yard for a fraction of the price of a city flat. It was cheaper to buy a house in these areas (and a car to commute in) than to even rent in the big city. Downside always was the commute – at least the length of it and the time it took. Now, those people are paying a different price – the price of gas. It’s taking a toll on them, and it is preventing sales. People who were already reluctant to spend the time on the road, now realize it is too expensive to do so, causing developments to stall halfway through, and home sales to drop significantly. The Washington Post did an article yesterday on this very subject, and although it illuminates the problem in a different part of the country, the basic theme of the article is true for every state.
REO Chronicle recently ran a piece addressing the constantly debated “Rent or Buy? Craigslist and Realtor.com.” They (really) randomly chose cities around the country to illustrate the point, with the outcome being no surprise. In some areas of the state and country, it pays to buy, in others it pays to rent. Hmmm, I don’t find that terribly surprising, and it was purely financial
with no emotional ties, tax advantages, etc. taken into consideration. Very cut and dried. I’d rather know if it is more feasible to buy now vs,. rent that it was 2 years or 5 years ago. Can anyone point me in that direction?
Also along the same lines is the idea of buying a home and having to rent it out or buying home just to rent it out. Janis Mara of SF Sweet Digs asked the question “Would You Ever Rent out Your House,” while Alison Ching wanted to know “Would You Buy Now to Invest and Rent Out?” The LA Times had an interesting article, “Homeowners rent out property as they wait for a better market.” It provides various scenarios, who is doing it and why.
Sue McAllister over at the Square Feet blog has gotten some firsthand accounts of people left stuck due to Financial Title Company pulling out of California last week. This is the second large title company to shutter its doors, following in the December wake of Alliance Title. Buyers and sellers alike are suffering at the hands of the closure, some even having trouble getting the keys to their new homes, and there is surely some nail-biting going on around the state.
Well, I hope by now that our readers are well aware of the plunging real estate prices that have occurred over the last year or two, here and across the nation, but apparently we need to be reaching more of an audience. Either that or we need to stock up on clues to hand out to people. Socketsite reported today on a consumer survey done by Seattle-based Zillow that, among other things, found that “Despite plummeting values across the nation, 62 percent of homeowners believe their property’s worth has actually climbed or stayed the same during the past year.” Wow, we should be handing out Ostrich Awards to that 62%.
August 5, 2008
In addition to the big-ticket prices that people in the Bay Area pay for homes, there is the big-ticket property tax that has to be paid. Thanks to Proposition 13 (which coincidentally kept me from getting a county job back in 1980), taxes remain fairly stable throughout the duration of ownership of a home. The tax rate limited by Prop 13 is a max of 1.2% of the home’s assessed value, plus any special city, county or state assessments, with increases not to exceed more than 2% per year. This is good news for your grandparents and parents, and you, if you have owned the home for a significant period of time. But for new homeowners, it can be a big shock. There is a general tax levy of 1%, but each county has its own additional taxes. For example in San Mateo County the annual property tax is 1.06% and in San Francisco it is 1.141%. How do California property taxes fare against the rest of the United States?
Unlike California, 37 states have state property taxes in addition to whatever the local jurisdiction (city or county) charges. That means higher property taxes for those particular states. Overall, it sucks to live in New Hampshire, Connecticut, New York and Massachusetts, as these states have the highest taxes based on Census Bureau information. States like New Hampshire do not have taxes on wages, choosing to obtain 43% of state funds from homeowners. On the other end of the spectrum are southern states, such as Arkansas, Mississippi, West Virginia, Alabama and Louisiana. According to the “Residential Real Estate Tax Rates in the American Community Survey” authored by Natalia Siniavskaia, Ph.D. and published on HousingEconomics.com, the three states with the most expensive homes (California, Hawaii, and D.C) have some of the lowest property tax rates in the nation.
If you live in California, the average property tax rate is $4.77 per $1000 of value. It took me awhile to reconcile this with the above referenced rate of 1.06%. But it is based on home values now and taxes collected now. For example, if you bought a house in 1995 for $315,000, you would currently be paying about $4000/year in taxes. That house is now worth approximately $1,000,000, but you aren’t paying 1.06% on that value. Because of Prop 13, you are only paying .4% or about $4 per $1000 of value. People who have been in their home for 30 years may only be paying $1-2 per $1000 of value, while today’s buyers are paying $10.60 per $1000, averaging out to that $4.77 I mention above. (Hope I got that right!)
So it appears, that while our home prices are still exorbitant by most state’s standards, our tax rate is within reason. Chalk one up for California…..
