What a Difference a Day Makes

I know I read yesterday morning’s paper, but I had no chance to catch the evening news, so it came as quite a shock that in the 24 hours I was shut off from news sources that the government had taken over WAMU and already sold off pieces of it. First, how did they do this without the bailout agreement getting through Congress? And how did they rustle up a deal in less than 24 hours? I mean it takes longer than that just to fill out the paperwork to sell a friggin house!The collapse of Washington Mutual is the largest in our nation’s history, and comes after getting hit daily by customer withdrawls and widespread stock sales, and the weight of enormous (bad) mortgage debt. The bank had assets ($307b) almost ten times larger than that of IndyMac, which failed in July ($32b). WAMU’s assets have been sold to J.P. Morgan, who also picked up Bear Stearns earlier this year. Looks like they are gunning to take over as top dog in the banking world, ranked second to only BofA.

If you are a WAMU banking customer, you should see no change in service at this point. As the companies integrate, I would surmise that branches will close and consolidate where there is overlap, and layoffs will be expected. But short term, all is status quo. If you are a shareholder, however, you are on the short end of the stick. This goes for individuals as well as equity investors. The government takeover means shares in WAMU are worth nothing.

BONUS: On the lighter side of things, I happened to catch the YouTube clip of Represenative Marcy Kaptur (D-Ohio), who took 5 minutes of the House of Represenative’s time earlier this week to be snarky, snide, and facetious about the $700 mil bailout. My kind of elected official! You can watch her pontificate on “Wall Street Bailout.”

Poway Condos Sell for Over 100% of List

Around the Carlsbad area, all homes are getting a slight discount to list price. Sale-to-list prices don’t t represent the overall trend of prices, just where the discounts from list are to be had. In Poway,there were no such deals: condos sold at 100.1% of list. Only two deals are in the sample, though. The best discounts on condos were in Del Mar, at 92.2% of list price.

All this data and more becomes clear at our Red Carpet Events. The slides from last night are here.

Carlsbad Area Condos, July 22- Sept 22 2008

Carlsbad Area Houses, July 22- Sept 22 2008

Sick….and Tired

Not only is that the state of my health these days, but it’s also my state of mind. I wake up every morning thinking that we will have turned the corner on the mortgage and credit crisis, only to read that another financial institution is in trouble and the government has invested in very costly buckets to bailout every Tom, Dick, and Harry. Every news agency, media outlet, blogger, and water cooler huddle is discussing the topic. And, in general, most of the people are making more sense of it all than I could. The words tend to run together and after a few grafs all I see is blah, blah, blah….

I do feel that it is important to keep up on this topic, however, particularly with an election coming up. Democrats and Republicans are jockeying for position and higher ground, which complicates the matter considerably. For further qualified and/or interesting enlightenment on the subject, I recommend the following:

“Paulson, Bernanke Tell Lawmakers Urgent Action Needed on Treasury Plan” Wall Street Journal

“Bernanke: Bailout Or Else” SF Chronicle

“The $700 Billion Bailout: One More Weapon of Mass Deception” Alternet

“What the latest bailout plan means” ChrisMartenson.com

“Where’s My Bailout Money?” DadTalk

A Kitchen Odyssey: What Needs to Be Done

Prior Posts:
A Kitchen Odyssey: Follow Along, If You Dare
A Kitchen Odyssey: From the Beginning

As mentioned in my last post, our kitchen cabinets are peeling, which is the impetus to make some changes in the kitchen. We live in a neighborhood of $1mil+ homes, and our kitchen really does not reflect that. The original cabinets are a cheap, thin wood in addition to their current peeling state. Refacing or replacing the doors is an option, but it still means low-quality cabinetry on a whole. So I don’t see any way around replacing them completely. That and the fact that there just are not enough of them. While I have whittled down my pots and pans considerably, I do own a variety of larger items that don’t seem to fit anywhere well, like my professional mixer and canning pots. I also do not have enough room for spices and baking goods, and no pantry whatsoever, necessitating open shelving right outside the kitchen door in the garage. And let’s not even go into the limited amount of counter space I have.

Speaking of counter space, the current black-and-white tile countertops are in fair condition. There are some cracks and chips, and the grout is not holding up all that well. And as an avid cook, I have found that the uneven surface is not optimal. I do like the fact that tile holds up to heat and you can use it as a quick cutting surface, but being so white, it is hard to keep clean and shows every speck of dirt, food, and berry stain. I am constantly scrubbing them. I am in need of a smooth and much larger surface. I also need a larger sink. Either a deep farmer’s sink, or a deep two-tub sink (depends on how much space I want to give up). As for the faucet, well…that couldn’t wait. It exploded on my son two weeks ago. The plastic hose split, and when we pulled out the entire hose, there were kinks and splits. We replaced it with a residential version of an industrial faucet, which I am happy with.

We’ve also replaced the dishwasher, due to a leaky seal and flooding problem, and now have a quiet KitchenAid. We also had to buy a new refrigerator in December. I went from a bottom freezer model to a side-by-side. I had width constraints to deal with, so my options were limited. I would have liked the side-by-side with the bottom freezer, but it really didn’t work as well and many were out of our price range at the time. Unfortunately, this particular model, while energy efficient and with an ice and water dispenser (which I have never had), is just too small for me. I cook in large quantities, necessitating fridge and/or freezer room for food. I can no longer make freezer jams, or stock up on anything when it goes on sale. Nevertheless, it is new and I’m not going to be replacing it this time around. Have to make do, I guess. If I have additional cabinet space and can move the pantry inside, then I will be able to purchase an outside freezer, which would be ideal. We had one for over 20 years, but it recently died.

As for the cooking options, I currently have a white glass 5-burner Dacor stovetop with white burners. Bad. Never buy white, not if you cook as much as I do. My husband actually got out a razor blade to try and scrape off some of the burned bits the other day because it was looking so bad. I also have the original JennAir ovens, which are now over 40 years old. They are finally dying, and don’t really cook at the temperature you set them at. This is bad news for someone who tests recipes for a food column. So my options are to buy two new wall ovens and one cooktop or to switch to a full stove/oven combo and turn the wall oven space into a pantry. I like the convenience of two ovens when I’m doing a lot of cooking, but neither is very large and they will not accommodate larger baking sheets or jelly roll pans. I could also really use the pantry space. This is a toss-up at the moment and will depend on how much extra cabinetry we can install and what the yet-to-be-set budget will accommodate.

We also realize that for resale purposes, as well as aesthetics, that we will need to replace the industrial-looking FLOR carpet tiles. These carpet tiles go from the kitchen into the dining room (which is currently my office). We need to do the floor in both rooms, but it doesn’t necessarily have to be the same thing. So we have a lot of options here.

We recently had our electrician son install recessed lighting in the kitchen, Two over the sink and three down the center. He wants to install two more over the stove when we put that in place. It’s amazing how much more light I now have. So much so that it illuminates every speck of dirt on the counter, every spill on the stove, and every grain of sand on the carpet. Really makes the counters and stove look bad. And makes me more conscious of my next choice.

The last big consideration at this point is whether to remove part of a wall. Originally a pass-through was built over the stove from the kitchen into the dining room. Because I knew I would be using this space as an office, we chose to fill in the area with glass blocks. (See photo above.) Now we are thinking about removing not only the glass blocks but expanding out a foot on each side all the way up to the ceiling. That would open up the kitchen more and we could even build in a sitting/bar counter in the dining room.

Ahhh, so much to do. Kinda scary, don’t you think? Of course, that means there is a lot more to write about and share. Tune in next time….

5 Reasons to Be Happy About the State of Real Estate

1. Mortgage Rates: Prime is at 5%. We’re talking low 6% on many conforming mortgages, and under 7% for jumbo, in many cases. Certainly a significant decrease from when I bought my first home in 1987 and the prevailing rate was 10%. For more on this, see Tuesday’s post here.
2. Choice: Let’s face it, there is a bit of a glut right now in most Bay Area cities. You have a lot of properties to choose from, both traditional MLS listings and REOs, not to mention weekly courthouse auctions. And the secondary housing market is suffering as well, so now is the time to pick up a summer home (or maybe buy a summer home instead of a first home and enjoy rental income).
3. Price: While prices aren’t what they are in say, Idaho or Wisconsin, they have rolled back to 2003-4 levels and are continuing to slide. Add to that realistic sellers making significant price cuts (and/or offering incentives like repairs and closing costs), and it’s gotta make you happier than two or three years ago when many buyers were completely priced out of the market.
4. Tax Credit: First-time home buyers can take advantage of the $7500 tax credit. Uncle Sam seems to want you in a home, and is willing to give you added incentive. The caveat here is that the $7500 is more of a loan than a tax credit, but it helps you out now and payback comes as your income increases over a period of time (theoretically).
5. There is actually a site that is called Happy Real Estate News, dedicated to bringing you only the positive information. While that might seem a bit short-sighted, we are overdue for a counterbalance to all the doom and gloom, and besides, who can resist “Happy Graphs”?

Glee and Jubilation: Feds Trying Harder

FBI Goes After Mortgage Fraud
Yesterday, testimony revealed that the FBI has increased the number of investigations for mortgage fraud to a total of 24. In testifying before the House of Representatives Judiciary Committee, Bureau Director Robert Mueller testified that, “Just like the (savings and loan) crisis in the early 1990s and the corporate excesses of the beginning of this decade, the FBI will pursue these cases as far up the corporate chain as necessary to ensure that those responsible receive the justice they deserve.”

The FBI is not publishing the list of companies under investigation, which would only fuel the fire and panic going on in mortgage circles these days. With Lehman Brothers in crash-and-burn mode, Fannie and Freddie under the government’s thumb, and rumors of other financial institutions struggling, the list could, literally, break the bank and send the nation into a further financial crisis.

Feds Deny Fannie and Freddie Execs
Imagine running a company into the ground and expecting an large multi-million exit package. Only those at Fannie Mae and Freddie Mac would. Fannie CEO Daniel Mudd was expecting $8.4mil (after a salary of $12.2mil in 2007), while Freddie CEO Richard Syron hoped to walk away with $15.5mil (who earned $19.8 mil in 2007). But the Federal Housing Finance Agency has denied them. We wouldn’t want it any other way, right?

Line in the Sand
It looks like the government bailouts are coming to an end. Public outcry seems to have reached the powers that be after the Fannie and Freddie takeover. Lehman Brothers is up a creek without a paddle, and no lifesaver is being thrown. Execs are frantically trying to sell of portions of the company (Barclays just stepped in to snap up part of the distressed company). AIG got a bit of a break, with a government loan, but it appears that the feds tried to structure the deal in such a way that both the economy and the government coffers benefit, by charging a high interest rate (11.5%), taking an almost 80% stake in the company, and having veto control over what assets are sold and at what price.

Balancing Act: Timing Is Everything

I always seem to be a day late and a dollar short, although thankfully my mortgage isn’t resetting anytime soon and there is no chance of foreclosure in my future. But we did wait just a bit too long to sell. We have many friends who were wiser, particularly those closer to retirement age, that were able to sell their homes at the height of the market and buy down into smaller homes, sometime out of the area. They have a pretty little nest egg to keep them comfortable for a long while. Our goal had been to do that next year, but now we have decided to hang on, do some remodeling, and wait for a more stable market. At least that is our decision this week. Another good example of poor timing is our mortgage. Right now mortgage rates are lower than they have been in 6 months, according to some sources. Perfect time to refi. But thanks to corporate layoffs, we only have one income right now, and would not qualify. So we will have to wait, and probably miss that boat, too.

I mention this only because prices have been on a downward spiral and mortgages are low, with no guarantee they will go lower. It may very well be the time when the see-saw is at an even point, not tilted toward low prices on one side, or low mortgage rates on the other. And even better, is that sellers seem to be waking up to the smell of coffee and getting more realistic quicker about price cuts. Yesterday, on the corporate Redfin site, there was a blog post by intrepid leader Glenn Klelman, singing the praises of Jeff Yee, who did an extensive survey on price reductions.

Jeff looked at all the active listings (MLS, REOs, FSBOs) in all the markets that Redfin covers. The good news, according to the post: What he found: 38% of currently active listings have undergone a price reduction at some point since going on the market. But it was the average magnitude of the drop from the original list price that shocked everyone here: 10.7%.

So, low prices, low mortgage rates, realistic sellers—this is a good combo for buyers right now.

Forget Moving Up, Buy a Second Home in Kauai

Earlier this year I took an anniversary vacation in Kauai. We’ve been to the Big Island and to Maui and were less than thrilled, due to either overtourism or volcanic landscapes. There is certainly beauty to be had on any Hawaiian island, but we were most impressed with the Garden Island of Kauai. Not a destination for the club-hopping, high-energy set, it is perfect for families and people trying to get away from it all. With only one road that goes only ¾ around the island—and in some places it is only one lane— and populated by more wild chickens than residents, it’s the perfect getaway place to relax, hike and de-stress. So why not buy a home or second home there? Especially since one of the Island papers is reporting that home sales and prices have sunk, particularly on condos. August is a typically busy month on Kauai, but only 6 condos sold, which is one-fourth of what sold last year. That’s enough to make sellers nervous and possibly take lowball offers. Condos sold last month range from $210,000 to $825,000 with the median price at $274,500. Single family home sales were doing okay, but the median price was down to $545,000.

An example: This is a 3-year-old home with 3 bedrooms, 3.5 baths on a 1 acre lot. Price: $379,000

I know there are direct flights from LAX to Lihue Airport on United (or a stop in LAX if you fly from San Diego), which makes it all the more tempting…even to me.

A Kitchen Odyssey: From the Beginning

Prior Post A Kitchen Odyssey: Follow Along If You Dare

I thought it might be helpful to tell you where we’ve been before embarking on where we plan to go on this remodeling journey. A bit of insight and background goes a long way on a project like this.

Our suburban ranch-style home was built in the late sixties, along with several other homes on our street. We purchased it in 1995 from the original owners, who had done very little (good) to it over the years. In fact, when I first toured the home with our agent, I was shocked at what I found (chronicled in an earlier post titled “What’s That Smell?“) The galley-style kitchen had stained and worn linoleum, dirty wood cabinets, the original electric cooktop and double ovens, and cracked countertops. The color scheme was dirty beige, with some hideous wallpaper accent, and the room was very dark.

Prior to moving in we did a mini-remodel on the kitchen. It was very low-budget, as the whole house had to pretty much be gutted. (We had to remove all carpeting, wallpaper and paneling, refinish hardwood floors, re-texture walls, paint every room, replace doors, tear out an illegally enclosed porch, among other things.) So we gave our ten-year-old a sledgehammer and let him go to town on the old tile countertops, we tore out the fan hood, stovetop, dishwasher, fridge, floor, sink, and fixtures. We pulled off all the cabinet doors and steamed off the wallpaper. Then we started repairing, repainting and replacing.

We added a gas line for the new Dacor 5-burner stovetop, had new black-and-white tile counters installed along with sink and fixtures. The cabinets were prepped and painted a light gray, as were all the doors and drawer fronts with new hardware. All new appliances, except the double ovens, were installed. And finally walls were painted and vinyl flooring installed. This makeover lasted until about two years ago.

In 2006, the dishwasher developed a leak in the front seal and we came home one day to find the floor in front of it raised and swollen from water. Time for action…again. We had to tear out the dishwasher and the vinyl to get to the subfloor. Not such an easy task, however, as there were 3 layers of vinyl and linoleum. The original linoleum floor, a second vinyl layer probably from the 1980s, and the layer we had installed. The years and traffic had caused the first two layers to practically fuse together, and the first layer was almost impossible to separate from the subfloor. Shoulda hired a pro. But we made the necessary repairs, installed a new dishwasher and chose to replace the linoleum with a FLOR product, as a temporary fix. A rather unconventional choice, as most homeowners don’t like carpet in a kitchen. But this is not your ordinary carpet. FLOR comes in large squares, that are easy to put down, and should there be a spill, you can literally pick it up and rinse it off in the sink! It’s actually held up well, but I don’t like it near as much as I thought. We also decided to repaint the walls and cabinets during this time, which is where we made our mistake.

Apparently when the cabinets had been repainted in 1995, an oil-based paint had been used. In 2006, we used an acrylic paint, which was fine at first, but has since started to peel away…a little at a time, leaving our cabinets looking, well, tacky (see photo at right). Hence our current call to action.

Next Time: What Needs to Be Done

Redfin Returns to San Diego: You Are Invited

Redfin is extending a personal invitation to you for its next San Diego Red Carpet event. Redfin has been bouncing between all its areas (Boston, Seattle, LA, SF, Chicago, Washington DC), holding home-buying classes, one-on-one meetings with agents, screenings of new Redfin features, and providing food and beverages to interested home buyers. September 24th will be the next event, this time in Carlsbad.

From 6-8 pm, at The Crossings at Carlsbad, you can join Redfin staff and agents and learn more about the home-buying process, how to use the Redfin site to its best advantage, chat up staff about what your needs are and suggestions for site improvement, and nosh on some good eats.

With the event rapidly filling up, I suggest you get on over to put your name on the list. This popular Red Carpet Event offers a one-hour home-buying curriculum that includes:

• WHERE TO LOOK ONLINE The best sites for zoning, pricing, crime, tax records, divorce records, schools, neighborhoods, mortgages.
• WHEN TO BUY: Price-to-rent ratios, Case-Schiller indices
• WHAT YOU CAN AFFORD New lending rules, e-preapprovals & rate-shopping.
• WHERE TO LOOK Current MLS data on closing-vs-list-prices by neighborhood.
• HOW TO HIRE AN AGENT 15 questions to ask first.
• WHAT TO LOOK FOR ON A TOUR A 25-point checklist.
• WHEN TO PLAY HARD-TO-GET: 7 signs that the seller’s ready to deal.
• WHEN TO POUNCE 7 indicators the house will be gone in a week.
• HOW THE GAME HAS CHANGED Auctions, bank-owned listings, short sales.

So mark your calendar for Wednesday September 24th, and be sure to RSVP early.