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Rising California Housing Costs Challenge Renters and Home Buyers

by The Domis Team

California’s housing costs are rising again as home values appreciate and monthly rents escalate. According to an article in the Los Angeles Times, a two-bedroom apartment unit in California has an average rent of $1,341.00.

Comparatively, the median California home price reached $337,040 in January 2013, an increase of 24.1% from January 2012.

An FHA mortgage for this amount, figuring a 5% down payment and a 30-year fixed rate loan at 4% interest, would have monthly principal and interest payments of $1,528.63. Of course, you would still have to factor in escrows for property taxes and homeowner’s insurance.

Whether renting or owning, affordable housing has been a long-running concern in California. The National Low Income Housing Coalition says that an annual household income of $53,627 is needed to rent a two-bedroom California home.

In these examples, home affordability is measured by the percentage of monthly income needed to support rent or a mortgage payment. Ideally, tenants should not spend more than 30% of their monthly income on rent. Based on average California rents, a tenant would need to earn $25.78 per hour to stay under this ratio. 

For the purpose of mortgage underwriting, FHA loans require the mortgage payment, including principal, interest, taxes and insurance, to be 31% or less of the buyer’s monthly income. A home buyer would need to earn approximately $29.39 per hour based on average home prices. Or, have a co-borrower whose income could help meet the required ratios.

Housing affordability isn’t likely to get easier. Nationally, home prices are expected to increase annually by 3.3%. Rents are expected to increase by 3% to 4% this year. In California, our limited home inventory and increased housing demand will keep upward pressure on both home prices and rents.

Home buyers have the advantage of insulating themselves against future housing cost increases. Low interest rates make long-term home ownership attractive, and home prices, while escalating, are still below their peaks. Buyers who have been waiting to get into the market may see their best chance this year, as improvements in values allow more homeowners to sell.

Looking to buy or sell a home in Whittier? Look no further! At the Domis Team, we have the local expertise and the friendly, professional service you can count on. Whether you need a comparative market analysis to find your home value, or you'd like to visit Whittier homes for sale, we are here to help you! Contact us today for the Whittier real estate guidance you can trust!

The Domis Team
Prudential California Realty
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Lean Home Inventories Expected to Boost Home Values in California

by The Domis Team

According to the Wall Street Journal, the real estate story of 2013 will be about shrinking home supply in the face of increasing buyer demand. Nationally, foreclosure inventories are down 20% from a year ago!

The bulk of the remaining "shadow inventory" is located in states where foreclosures have a lengthy judicial procedure, such as Florida, New York, and New Jersey. In these states, home values are expected to remain depressed because of the backlog in foreclosures.

Meanwhile, states like California, Arizona and Nevada have seen a better-than-expected improvement in home values during 2012 because the statewide foreclosure inventory significantly dropped.

According to the California Association of Realtors, distressed home inventory accounted for 46% of the Los Angeles County real estate market in November 2011.

In November 2012, the distressed home inventory for Los Angeles County was down to 33%. Simply put, Los Angeles County absorbed distressed property sales at a faster rate than they occurred. It's practical to expect this rate of absorption to accelerate in 2013 as home demand remains strong but the supply of homes for sale remains limited. In turn, this will boost home values!

To balance the market, we need to see more homes for sale in Whittier, La Habra and La Mirada! Homeowners in Los Angeles and Orange County who have equity in their homes will have good selling opportunities in the months ahead!

Are you thinking of selling your home? Contact us for the latest sales reports in the Whittier housing market! We will be happy to share the latest home sales data for your neighborhood!

Whenever you are thinking of buying or selling a home, get the local expertise you can trust! Let the Domis Team show you the wonderful real estate opportunities available in our markets today! Whether you need information about your current home value, or you just have a few questions, you can always expect the best in courteous, professional service!

The Domis Team
Prudential California Realty
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Whittier Real Estate Forecast for 2013

by The Domis Team

California saw healthy gains in home prices during 2012. Will the positive trend continue into 2013? Let's take a look at some of the facts and forecasts for housing in 2013!

First of all, the Federal budget debate is creating economic concerns that could impact the nation as a whole. If the economy pulls back and we see a drop in employment, naturally there could be a dampening effect on housing. This would be aside from fiscal policies that directly affect real estate. All we can do for the moment is focus on the fundamentals, and remember that the market is subject to change.

On to the good news. Freddie Mac's chief economist expects that mortgage interest rates will remain below 4% for most of 2013. Home prices nationwide are expected to rise up to 3%.  New housing starts should reach 1 million units in 2013.

With this projection in mind, let's look at California's pending home sales. Purchase contracts in November 2012 were up by 9.8% compared to November 2011. November's activity was also an increase of 1.9% over the previous month. The momentum going into 2013 could position us for a strong year in home sales statewide.

Locally, both Whittier home sales activity and prices are above what we saw a year ago. The volume of home sales increased by 36% during 2012. Current home asking prices are 22% higher than a year ago, which indicates that some sellers are testing the price threshold of the market.

There will be some challenges ahead in 2013 for both Whittier home buyers and home sellers. Mortgage interest rates are expected to remain low, but mortgage underwriting requirements will remain tough. Home prices are improving, but home appraisals are still very conservative. Our Whittier real estate market is likely to continue its upward trend, but restrictive lending and stingy appraisals will keep it from becoming a runaway train.

Need to know what's happening with home prices in your neighborhood? Contact us for the best in local expertise! We will give you courteous, professional guidance for Whittier real estate!

All the best to you in 2013!

The Domis Team
Prudential California Realty
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Plenty of Buyers, Not Enough Homes for Sale in California

by The Domis Team

We have buyers, we need more homes! This is the message from among 15,000 real estate professionals in the 2012 Annual Market Survey, conducted by the California Association of Realtors®. Here are the highlights!

Scant home inventory is an issue statewide. Scarce supply continues to boost home prices and cause bidding wars. An amazing 57% of home sales in 2012 involved multiple offers.

The days on market are half what they were a year ago, with 2012 traditional home sales seeing a brisk average of only 32 days. Distressed properties are also moving faster, with short sales averaging 90 days on market during 2012, as opposed to 141 days a year ago. 

The 2012 Market Survey also revealed the following home buying trends in California:

  • 30% of home buyers paid cash.
  • 17% of home buyers were investors.
  • 40% of first-time home buyers are choosing bank-owned properties or short sales.
  • 35.8% of home buyers are first-time buyers, up from 34.2% a year ago.
  • 5.8% of buyers were from other countries, with China and Canada leading the group.

Our local market trends in Whittier show similar patterns. We have ready buyers, but the home supply in Los Angeles County and Orange County is a bit thin!

What this means to you as a home buyer is that preparedness is everything! Working with local real estate professionals will get you better results than trying to "catch" new listings on your own!

If you are thinking of selling a home, you need expert advice and the right strategy to make the most of today's market! It may be tempting to price your home high, but 70% of buyers are still relying on mortgages to finance their home purchase - which means a bank appraisal will be involved.

Selling smart puts you in the best position to attract qualified buyers and attract multiple offers. Let us show you how!

At the Domis Team, our local market experience gives you the professional guidance you need to make your plans a success! Contact us today for the best in Whittier real estate service!

The Domis Team
Prudential California Realty
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Are Your Home Selling Expectations Realistic for Whittier?

by The Domis Team

After enduring years of declining home values, home sellers in California and around the country are testing the price thresholds of the current housing market. According to a survey by HomeGain, 77% of home sellers believe their home is worth more than the values estimated by their real estate professional.

When surveyed about this issue, real estate professionals responded that almost half of their selling clients overestimated their home values by 10% to 20%. 

Home seller expectations are even higher for the future, according to a survey by Redfin. When homeowners were asked about their selling expectations, 80% believed that home sale prices would be higher in a year or two. Another 32% said they intended to price their home above comparable properties.

While our Whittier real estate market is improving, it's a gradual process. For example, the median home price in Whittier was $310,000 in August 2012. In August 2011, Whittier's median home price was $304,000. Los Angeles County saw a median home price of $336,500 in August 2012, up from $317,500 a year ago.

It pays to keep your expectations based on market reality. While it may be tempting to price your home above the market, remember that home appraisals are far more conservative today than in the past. If you're fortunate enough to attract a buyer, but the appraisal falls short, the buyer's financing could fall through. Holding out for the highest dollar doesn't make sense if the sale can't happen!

If you are thinking of selling your Whittier home, let us help! Our local market expertise will help you find the right price range for your home. By pricing your home correctly from the start, it will attract serious buyers and spend less time on the market. You also have a better chance of a successful closing.

When you have questions about your home value, or need to know how the Whittier real estate market is doing, call the Domis Team! Our friendly, professional service and local market experience makes the difference!

The Domis Team
Prudential California Realty
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Whittier homeowners who have negative equity and have been experiencing a personal hardship could soon have help from the Federal Housing Finance Agency. Effective November 1, 2012, new short sale rules go into effect that will streamline the process for all mortgages backed by Freddie Mac and Fannie Mae. Since these government-sponsored agencies support over half of all active mortgages in the country, the changes could have wide-reaching impact.

Until now, homeowners who were current on their mortgages were not usually eligible for a short sale. This created an unfortunate "incentive to default" which often led to foreclosure. The new rules cure that issue, and improve other important elements of the process. Here's a sample of the major changes.

1. Homeowners who are up-to-date on their mortgage payments can now be considered for a short sale, if they have a qualifying hardship. For the purpose of the program, a qualifying hardship involves any one of the following:

  • Divorce
  • Death of borrower or co-borrower
  • Disability
  • Job loss
  • Job relocation, or new job, located 50 miles away or more from current home

2. Homeowners who are behind on their mortgage payments, and are suffering from a qualified hardship, will have their cases reviewed in an expedited manner, with fewer documentation requirements.

3. Second lien holders will have a financial incentive to cooperate with the short sale on the first mortgage. The incentive is capped at $6,000.

4. Mortgage servicers working on behalf of Freddie Mac and Fannie Mae will be empowered to approve qualifying short sales directly.

5. Homeowners who have financial resources at their disposal will be required to make a contribution to the short sale. In return, they will not face deficiency judgments for the remaining balance of the mortgage.

If you are thinking of selling your home and it has negative equity, contact your mortgage lender to find out if your loan is part of Freddie Mac or Fannie Mae's portfolio. From there, it's a matter of obtaining the appropriate forms and staying in touch with your lender throughout the process. Keep in mind that lenders will need to update their internal processes to match the new rules, and information at this point could be a bit lean.

When selling your Whittier home, it pays to gather good information from the start! Our Whittier real estate market changes quickly and these new rules are just one example why. Also, the new short sale guidelines could affect our market in the upcoming months by adding inventory. These are just a few reasons why working with dedicated, experienced real estate professionals is an absolute must.

Do you have questions about real estate, or need information about your neighborhood sales activity? Contact us today for the very best in local expertise and friendly, professional service! We will be happy to provide the latest Whittier market information and help you succeed with your goals!

The Domis Team
Prudential California Realty
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What Do Whittier Home Buyers Want?

by The Domis Team

Home buyers have practical priorities in the Whittier real estate market. Bigger is not always better; fixer-uppers are not in vogue, and home value is everything. Home buyers have become highly selective due to economic concerns and tighter mortgage lending. Homes that are energy-efficient and affordable have stronger appeal than the mini-mansions of the past.

Now that most mortgage loans require larger down payments, home buyers may also find themselves limited in purchase power. California homes under $350,000 tend to sell quickly; homes priced under $500,000 have buyer competition.

Here’s more about what home buyers want, courtesy of ImprovementCenter.com:

Modest floor plans. Most home buyers consider homes sized at 2,000 square feet to be adequate for their needs. The next most popular size is 2,600 square feet. Home builders are paying attention to the shrinking home trend; the average new home size is expected to be 2,152 square feet by the year 2015.

Organization and comfort. Home buyers are looking for low-emittance windows, insulation throughout the home, energy-efficient appliances and programmable thermostats. Amenities such as 9-ft ceilings, laundry rooms, walk-in closets and well-appointed master baths are popular.

Improved energy efficiency. Plentiful natural light, energy-conserving appliances, and efficient mechanicals make for an affordable, greener home. It’s predicted that by 2016, 38% of new homes will be built with “being green” as the selling point.

Whittier home sellers do not need to make expensive renovations to attract today’s buyers! Simple updates like replacing old kitchen appliances, and installing water-saving faucets and shower heads can help give your home green appeal. To expand the sense of space in your home, remove clutter and allow in as much natural light as possible.

At the Domis Team, we understand what appeals to Whittier home buyers, and we understand the Whittier real estate market! If you are thinking of selling your home, contact us first! We will provide you with the best in local market expertise and friendly, professional service!

The Domis Team
Prudential California Realty
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Understanding Your Whittier Home Appraisal

by The Domis Team

The Wall Street Journal recently reported that approximately one-third of home sales are affected by low appraisals. Low appraisals cause delays at the least, and cancelled sales at the worst. Often, the culprit of a low appraisal is the presence of distressed properties that are factored in to neighboring home values without regard to property condition. 

As a Whittier home seller, what can you do? First, recognize that a comparative market analysis and a full home appraisal may have differences, based upon the objectives involved in each analysis. 

A comparative market analysis looks at the most recent sales prices of homes most similar to yours, in your neighborhood or as close to it as possible. As your Whittier real estate professionals, we provide a thorough market analysis in order to arrive at a professional opinion of a feasible sales price. While we provide information and counseling, the actual sales price is chosen by you.

In contrast, an appraisal is performed by an independent third party in order to satisfy the mortgage lender of the home buyer. Lenders are concerned with the collateral value of the home, and therefore the appraisal must justify the amount to be financed. Here are some questions posed in valuation principals:

Conforming use: Is the home compatible with the structures around it, and does it meet current zoning requirements?

Change: Is the area in transition, and if so, how may it affect this property?

Substitution: What is the cost of other homes of this type, square footage, and amenities?

Supply and Demand: Is this type of home highly desirable in today's market?

Highest and Best Use: Is this the right purpose for this property, or would it have higher value if used in another manner?

This is a basic introduction only, and you can learn more about appraisals by visiting the California Department of Real Estate.

If you are thinking of selling your Whittier home, we would be happy to help you! Our local market expertise will help you find the right price range for your home. By pricing your home correctly from the start, it will attract serious buyers and spend less time on the market. If you have questions about your home value, or just want to know how the Whittier real estate market is doing, give us a call! Our friendly, professional team is ready to assist you. 

The Domis Team
Prudential California Realty
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Real Estate Update for Whittier Home Sellers!

by The Domis Team

There’s some good news for Whittier home sellers: according to the California Association of Realtors, median home prices statewide increased to $308,050 during April 2012. This is a price increase of 5.7% from the prior month, and an increase of 4.7% from a year ago.

California median home prices have not been above $300,000 since December 2010.

One of the drivers behind price improvement is the reduction in distressed properties.Short sales and bank-owned properties accounted for 42% of total home sales in April 2012. A year ago, distressed properties accounted for 47.7% of the market.

Here in Los Angeles County, total sales activity increased 1.3% from a year ago, though the median home price of $289,700 is a bit softer than the California average. The average time a home spends on market has improved, with homes showing 54.8 days on market for April 2012, down from 55.5 in April 2011.

We are also seeing a reduction in the number of homes on market from a year ago, and shrinking home inventories have contributed to firmer prices. On the average, demand is highest for homes listed under $500,000. Current statewide inventories are running just under a 4 month supply in this price range. Last year, we had about 5 and ½ months of supply. In all price ranges, inventories have declined from a year ago.

The tighter supply, combined with a reduction of distressed properties and an improving economy, have real estate analysis optimistic about the housing market. However, the fact that distressed properties still account for 42% of the market is a reminder that future home prices will have a very gradual rise. Much depends on the volume and handling of distressed properties that remain in lender’s pipelines.

What does this mean for Whittier home sellers? The value of your Whittier home is always affected by the most recent sales of similar homes in your neighborhood. As your Whittier real estate professionals, we can show you the latest market data and evaluate your home value. When you decide to sell, you can trust our local market expertise for a sales strategy that works!

If you are thinking of selling your home, or you just have a few questions, contact us today! Our friendly real estate professionals are ready to help you!

The Domis Team
Prudential California Realty
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Will Debt Relief End for Whittier Short Sales?

by The Domis Team

Our prior blog from April 24 talked about changes to the short sale process and how it could help the Whittier real estate market. However, the clock is running out on an important benefit of short sales. The 2007 Mortgage Debt Relief Act is set to expire at the end of December 2012.

Unless Congress takes action to extend the law, home sellers with closings in 2013 would have to count any forgiven mortgage debt as income for tax filing purposes.

The Mortgage Debt Relief Act of 2007 allows taxpayers to exclude “income” from the discharge of debt on their primary residence. Debt reduced or forgiven via mortgage modifications, short sales and foreclosures generally fall into this description. The tax break is considerable, as it allows up to $2 million in forgiven mortgage debt to be exempt from income tax. This provision applies to debt forgiven in calendar years 2007 through 2012.

The IRS sees forgiven debt as “taxable” because you received the benefit of the loan and use of the proceeds, but were released from the obligation of paying it back in full. To the IRS, the difference between what you borrowed and paid back is a monetary benefit, and therefore considered income. Without the Mortgage Debt Relief Act, the impact of the housing downturn would have been much more severe for homeowners and the economy as a whole.

What does this mean for Whittier home sellers? If you are selling your home and it has negative equity, you need to take action now while the Mortgage Debt Relief Act could protect you. Of course, there’s the possibility that Congress will extend the law, but there are no guarantees. Visit the IRS.gov website to find out more, and see your professional tax preparer for guidance.

If you’re thinking of selling your Whittier home, now is the time to get the information you need in order to make the best decisions. Contact us today for the very best in local expertise and friendly, professional service! We will provide you with the latest Whittier market information and evaluate your home

The Domis Team
Prudential California Realty
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