When will housing come back in California? Five experts offer their views

They are the questions on everyone's mind... Has the real estate market hit bottom? Is the real estate market going to get better? Worse? Stay the same? Is now the right time to buy? Sell? Wait?

So, when will housing come back in California? Five experts weigh in on the subject.

Although the steep decline of home prices in California ended in spring 2009, the weakness in the housing market after the expiration of federal tax credits for home buyers last year has led to some speculation as to whether the recovery is sustainable. 

Five experts, including Leslie Appleton-Young, the chief economist for the California Association of Realtors were asked to provide their view on the state of real estate and what they think is needed to get the housing market moving again.


•  In terms of home prices, the experts differed slightly with the majority predicting that home prices will remain flat throughout 2011.  Ms. Appleton-Young predicts home prices will rise 2 percent this year, while a foreclosure expert predicts housing prices to decline 5 percent in 2011.
•  According to Appleton-Young, there is little chance of home prices returning to their previous peak levels anytime soon. She said, “We are in a slow-moving recovery with prices stabilized at the moderate and low end. We are still seeing price attrition and price softening at the upper ends of the market.”  I can attest to that.
• California’s recovery will hinge on location, according to Richard Green, director of the USC Lusk Center for Real Estate.  Areas between El Centro and Sacramento likely will not see a return to peak prices for a long time.  However, places like La Jolla, Laguna, Huntington Beach, Atherton, Palo Alto, the city of San Francisco, and Marin County could experience a return to their peak prices within the next five years, according to Mr. Green.  I would add Carmel, Monterey, Pacific Grove and Pebble Beach to that list as well.
• Foreclosure expert Bruce Norris of the Norris Group believes the market is being artificially boosted by government programs and is set to fall further this year.  Mr. Norris believes the demand for housing is most-needed for a sustainable recovery.
• California’s coastal markets will make a return once the job market improves, according to Emile Haddad, chief executive at FivePoint Communities Inc.  In turn, that will lift consumer confidence.  However, California’s inland areas are more likely to lag behind, and builders will have to reconsider the kind of product they offer in certain places.  

With that market info in mind, let’s take a look at some product we have around these parts, all looking good in terms of price.

18773 CACHAGUA RD. Carmel Valley – not on MLS yet- $2,995,000
This is a secure fenced communication satellite site. Extraordinary opportunity to own a piece of history. The Jamesburg Earth Station received the first images from the moon in 1969 and was a fully functional communications station operated by AT&T until 2002. The antenna, the accompanying 10,000 square foot secure structure and heliport are on a 103 acre parcel located in Carmel Valley approximately 25 miles from Carmel by the Sea and the Monterey Peninsula. The adjoining two parcels which consist of 46 acres of vacant land and 12 acres with a 3 bed 1 bath home plus a barn may be purchased with the Earth Station site.  160 acres total   There’s an online registration to view the property 1 time only on 2/26/11.  You'll need to call me for the details on this one! 

3265 MARTIN ROAD, Carmel MLS #: 81038995 $1,199,000 Beds: 3 Baths: 2.5 
Price just reduced $100K Fully remodeled 50's contemporary quality home, top of the line appliances, directly borders Carmel Mission Trail Preserve with expanse of open land. On quiet cul de sac with views of Pt. Lobos. Large lot almost half acre with plenty of privacy. Move in condition with hardwood floors & two cozy fireplaces. Bonus is plenty of outside decks with views.  SqFt: 1,488 Lot Size: 21,000 Sqft

517 12TH STREET, Pacific Grove MLS #: 80954886 $723,500 Beds: 4 Baths: 2 
This charming Victorian home is an historic landmark in PG. It has been extensively remodeled yet still maintains the original feel of the home with 100 year old virgin redwood floors, a quaint parlor and a wonderful upstairs porch with views of the ocean. Historic Preservation Award Winner! Short Sale, lender approved.  SqFt: 2,238 Lot Size: 4,300 Sqft

1313 ADAMS STREET, North Salinas MLS #: 81101895 $185,000 Beds: 3 Baths: 2 
This is a Probate Sale. Ready to Go! Nice size backyard with lots of potential. Would make great home or investment property  SqFt: 1,470 Lot Size: 7,000 Sqft

© Patty Ross,  KRXA Radio Show #191  January 21, 2011

Fannie Mae Launches “WaysHome” Interactive Video Tool to Help Struggling Homeowners

I found this news fascinating as an ex drama school teacher.  Fannie Mae recently launched WaysHome, a free, interactive multi-media tool designed to educate homeowners about their options to avoid foreclosure, empower them to make informed decisions and motivate them to take action and seek help in 2011.

As part of Fannie Mae’s “Know Your Options” initiative to help struggling homeowners, the WaysHome video uses innovative technology to allow homeowners to put themselves in real-life situations, make informed choices and immediately see the outcomes of those actions.

Unique to the other industry-wide foreclosure prevention efforts, WaysHome was developed by Fannie Mae to educate distressed homeowners on the short- and long-term impact of their decisions. Through video reenactment, WaysHome allows homeowners to experience scenarios that address a range of options for avoiding foreclosure that include repayment plans, forbearances, modifications, deeds-in-lieu, and short sales.

Here’s how it works.  The video is set in a neighborhood that has been hurt by the foreclosure crisis. Real actors play three residents of the neighborhood—each in financial distress. Homeowners select to play one of the residents and, as their stories unfold, make important financial decisions for them and see how the consequences of these decisions play out. Fannie Mae provides helpful tips, tools and links during the process and users have the ability to go back and revise their decisions should their choices lead to a negative outcome. Most choices lead to an immediate consequence followed by a related teaching point.  Go to www.KnowYourOptions.com  and check it out.

Market Highlights from Friday, Jan 14th's radio show included:
1410 MANOR ROAD, Monterey MLS #: 81056834 $1,525,000
Beds: 3 Baths: 4 (3/1) 
Walking into this primarily single story home, you notice the luxurious amenities through out. The incredible gourmet kitchen opens to the dining & family room surrounded by huge picture windows that show a big, private backyard w/outdoor kitchen. The master suite boasts private patio, 2 large walk-in closets & spa-like bath. Upstairs is a full apartment w/kitchen & separate entrance.  5 car garage is a great perk!   SqFt: 3,255 Lot Size: 77,305 Sqft

833 QUAIL RIDGE LANE, Salinas Monterey Highway MLS #: 80782197 $1,575,000 
Beds: 5 Baths: 4 (3/1) 
Stunning valley views surround this Southwestern estate on 2.5 acres. Completely remodeled from top to bottom, this private home has 4 bedrooms in the main house + an apartment w/separate entrance. The chef's kitchen not only boasts granite & stainless steel appliances but also 3 huge, panoramic windows full of gorgeous views... not a bad way to cook dinner!  Every detail has been considered & included.  Horses OK.  SqFt: 2,728 Lot Size: 87,120 Sqft (allows 2 horses)

9150 CARMEL VALLEY ROAD, Carmel Valley MLS #: 81101286 $850,000
Beds: 4 Baths: 3 (3/0) 
Lovely Tuscan Ranch home with beautiful finishes inside and out, featuring an office, wine room, along with an outdoor fireplace and bocce court. Perfect for entertaining! There is an unfinished addition with plans and permits available...   SqFt: 4,121 Lot Size: 43,740 Sqft

3007 INDEPENDENCE AVENUE, Marina MLS #: 81101499 $419,000 
Beds: 3 Baths: 2 (2/0) 
Beautifully remodeled in 2010. Located on a quiet cul de sac. Hardwood floors, crown moldings, granite countertops, stainless steel appliances and a cozy wood burning fireplace in the den. Fenced yard with back patio. 2 car garage.   SqFt: 1,374 Lot Size: 7,246 Sqft

© Patty Ross, KRXA Radio Show #190  January 14, 2011

What low home prices and low mortgage rates mean to the Monterey Peninsula real estate market

Last week, the Wall Street Journal reported mortgage rates had declined to a 4-week low. The article is included in this blog, but what does this information mean to our local real estate market. On the Central Coast, home prices continue to decline in the high end areas of the Monterey Peninsula and inventory is still high.  This coupled with the historically low interest rates make this the 'sweet spot' in the real estate purchasing department.

From the Wall Street Journal . . . 
Home-mortgage rates declined for a second straight week, according to data released Thursday by Freddie Mac, but the housing market continued to face headwinds from a supply glut and the struggling employment situation.

The average 30-year fixed-rate mortgage fell to 4.71% in the week ended Jan. 13, reaching a four-week low, Freddie Mac said. The rate was 4.77% in the prior week and 5.06% in the prior year, according to Freddie Mac, a buyer of residential mortgages. To obtain the latest rate, the mortgage required payment of an average 0.8 point. A point is 1% of the mortgage amount, charged as prepaid interest.

The 15-year fixed-rate mortgage averaged 4.08% in the latest week, with an average 0.7 point, down from the prior week's 4.13% and the year-ago rate of 4.45%. Low rates could help a still-troubled housing market, which has been hobbled by persistent employment weakness and a large supply of homes.

Rates on five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.72% in the latest week, with an average 0.7 point, down from 3.75% in the prior week and 4.32% last year. Also, one-year Treasury-indexed ARMs averaged 3.23% in the most recent week, with an average 0.6 point, down from 3.24% in the prior week and 4.39% a year ago. 

(Source: Mortgage Rates Decline to 4-Week Low by Ruth Mantell, Wall Street Journal Digital Edition, Jan 14th, 2011)

When Borrowers Default on Second Homes

With the high number of second homes here on the peninsula this topic should be particularly interesting to many. Today we are talking about Strategic defaulting – where the homeowner has the ability to pay the mortgage, but chooses to stop making payments. Among affluent homeowners with second homes and investment properties, this is increasing.

•    Homeowners who strategically default are likely to find their credit will be negatively impacted and they should expect to be prevented from getting another mortgage loan for 7 to 10 years.

•    Many homeowners are concerned about the possibility of the lender suing for the amount of money owed on the loan when a house goes into foreclosure.  Whether or not the lender has legal justification to do so depends largely on where the property is located.

•    In “recourse” states, a lender can go after the homeowner, and usually other assets like a primary residence, for the full mortgage amount.  Examples of recourse states include Maine, New Jersey, and Hawaii.

•    In “nonrecourse” states, a lender agrees to accept whatever the property fetches at a short sale, foreclosure sale, or deed-in-lieu, and generally can’t sue for the full loan amount.  Florida, Connecticut, and Arizona are among the nonrecourse states.

•    California is in a third category called “single-action” or “one-action,” which allows the lender either to foreclose on the owner or file a civil lawsuit for the full loan amount.  Other single-action states include New York and Idaho.

•    Homeowners should be advised that even in a nonrecourse state, those who opt for a strategic default on a previously refinanced property may not be protected from lenders, because the mortgage is not in accordance with a first purchase.

•    Although California is a single-action state, lenders can still sue homeowners for repayment of a second mortgage or home equity line of credit.

We’re going to look at all condos today as these constitute many of the 2nd homes here on the Peninsula.

15 SPANISH BAY CIRCLE, Pebble Beach MLS #: 81025267 $2,700,000 Beds: 3 Baths: 4 (3/1)
Fabulous...Fabulous... Front line unit ... Golf course, ocean, crashing surf,  that is all you see!  What a view!!  Enjoy the amenities of Spanish Bay from your very own unit.  SqFt: 3,567

47 DEL MESA CARMEL , Carmel Valley MLS #: 81054184 $649,000 2 Baths: 2 (2/0)
Views! Views! Dramatic ocean, golf course, Carmel Valley & Santa Lucia mountain views from this nicely updated Del Mesa "B" model condo, 2 bed, 2 bath with den.  New kitchen appliances & countertops, carpet, tile, paint & deck plus countertops & sinks in baths. Complete with washer & dryer and attic access.  Large sunny south-facing deck.  Prestigious 55+, gated, active adult community.  SqFt: 1,469

15 OCEAN PINES LANE, Pebble Beach Active MLS #: 81036881 $500,000 Beds: 2 Baths: 2 (2/0)
Views abound from this condo in Ocean Pines. New carpet, paint, wet bar.  Patio off living room and master bed with crashing waves below.   SqFt: 1,272

14 SKYLINE CREST, Monterey MLS #: 81021350 $495,000 Beds: 3 Baths: 2 (2/0)
Attractive condo in sought after Skyline Crest complex Monterey. Preferred location backs up to the forest. Enjoy the city lights and forest views from this well maintained home! Coveted Skyline Crest is centrally located in Skyline Forest and is close to everything the Monterey Peninsula has to offer.  SqFt: 2,040

(c) Patty Ross, KRXA Radio Show #189  January 7, 2011