Yesterday, June 15, 2009, was the start of a new program in California called the California Foreclosure Prevention Act. The main goal of this legislation was to encourage mortgage loan servicers to be more aggressive with their loan modification efforts to try to keep people in their homes. There is an additinoal 90 day period between the Notice of Default and the Notice of Sale in which the lender and homeowner can work out a loan modification. The law was passed in February but is just going into effect now.

There's a lot of confusion in the public about the full scope of what this law really does. I found a great article by David Gibbs, an attorney in San Clemente, California explaining this bill in detail and laying out a great timetable explaining the new process. I'm reproducing his timetable here, but encourage you to visit the original article and get all the details about this new law.

Most of my plant posts are on my sonoma blog site, but the buckeye is interesting and prevalent enough that I wanted to share this with the AR audience. Ohio is the Buckeye state, of course, but buckeyes occur over much of North America. In California we have Aesculus californica, the only native buckeye to the state. It's also called a horse chestnut by many people.

This is a shrub or small tree for the most part, although it can grow to almost 35 feet tall. From my point of view as a frequent driver of backroads the spectacular impression the blooming buckeye makes is its most important characteristic. The flowers are big, abundant, fragrant, and striking against the green foliage of the tree. It's hard to miss these, and most people driving around California this time of year are presented with great displays from these broadly dispersed trees.

The other claim to fame for the buckeye comes from the adaptation to the California climate, More natives can handle the dry weather with their foliage intact, but the buckeye blooms early and loses its leaves before any other trees in the natural landscape. There are whole hillsides that look dead by the end of the summer, but it's just the buckeyes biding their time until they can put on another spectacular display near the end of May and beginning of June.

There's more information about the fish stunning power of the poisonous fruit and the ways the native Americans processed these for food, but you can google that. I just wanted to introduce you to this wonderful tree you may have passed many times, but never known about.

I've had reports on my reo.sonoma.net blog that many first time buyers just can't get in the door. They are prequalified with good emplyment and credit history, but they are running into a brick wall when they offer on homes.

"...we have been looking to buy are first house for under 205k - we have had 10 offers in and they we mostly all 25k over asking - and still we are being beat out by all cash offers and investers! it is not as easy as some would think to get a home - i wish that there was away to help eveyone like us from being beat out ..."

There has to be a better way for those of us in the industry to manage the selling cycle so it isn't so frustrating for buyers and sellers alike. I heard from Melanie Ross, an agent I respect in Vallejo, about this topic as a comment on another post I made. Melanie had this to say,

"it is a sellers market out there for REO properties. I used to be proud to say I wrote an offer, now one writes many offers before you can get one accepted. and as a REO agent, I feel for the agents bringing me multiple offers on my listings."

I have been fortunate enough to have offers accepted that weren't the high bid. I've also had dozens of offers turned down this year just like the potential buyer in the first quote. There may be no easy answer to this, but I'd love to hear the professionals here comment about their experiences with getting first time buyers into a home. We succeed best as an industry when we can keep everyone satisfied that the market is fair and open to all. When too many well-qualified people start to get shut out we need to think about ways to make our process easier to understand. Even if we are being scrupulously fair, if people are feeling upset, we have to listen to their concerns.

I Want My REO- Updated

I wrote in April (I Want My REO)about the shortage of REO properties for sale in Sonoma County, CA. Many other writers in different parts of the country have noticed the same thing where they work. I just compiled the stats for May and the situation is even worse now that it was in April.

Good News First

Sales are great! At the bleakest moments last year it looked like nobody would ever buy a house again. Those dismal times seem to be past. There are clearly weak segments of the market where I work, and some parts of the country are still waiting for any "green shoots", but I want to be the bearer of glad tidings. Sonoma County residential sales at the entry level segment of the market are very strong.

The chart accompanying this post shows the news in ways that may be clear to other real estate professionals, but are not at all clear to first time buyers. So let me spend a minute explaining the chart. Bear with me or skip ahead if you don't need help with charts.

The top line represents REO properties, both single family homes and condos,  that sold in May. 187 is the actual number It represents roughly six homes absorbed per day for the month. That compares to 134 REO sales last year for the same time period, so the volume is up almost 50% compared to a year ago.

The second line down is for pending REO sales. These are pretty firm transactions since the buyers have removed their inspection contingencies. There are 87 in this category and if you add them to the sales number you have 274 transactions that are either closed or near closing in the last month.

The third line looks as firm as the others, but it's the most hard to pin down. These are contingent REO sales and they often move back into active status. Many statistical programs consider them to be active, but if you are an eager buyer you will find that trying to purchase a property that is already contingent is a mainly futile exercise. I don't have any firm numbers for how many of these sales progress to pending and then sold, but I think most of them do. For our purposes I am going to consider them mainly sold.

The final line, Active,  is where all real estate buying takes place. Properties are listed, agents show them to buyers, offers get written, and if you're lucky, your offer gets accepted. Then it can move from Active to Contingent. All the upper lines represent frantic paperwork, inspection, and appraising activity, but that work is taking place for homes that are already off the market, so from a buyer's point of view the top three lines don't matter.

You can see that there are less than 140 REO properties available to purchase. Almost twice that many are in sold or pending status in the last thirty days, so that's less than half a month's supply at today's absorption rates.*

There are several key term to keep in mind for the active listings represented by the bottom bar:

*Absorption Rate - how long does it take to clear the homes off the market at the current buying pace.

Seller's market - when sellers get multiple offers for a property. Offers are frequently for more than the asking price.

Buyer's market - little competition for property. Buyers have their choice of properties and can dictate terms including lower prices, more repairs done by sellers, and other concessions from the sellers.

Inventory - What you can actually buy, i.e. there's a for sale sign on it.

What the chart tells us very clearly is that there is very little inventory, the absorption rate for REO listings is extremely high, and that we are strongly in a seller's market. What this chart doesn't tell you, but I will, is that the buyer's market from January and February of this year is gone.

I will write in future posts about a potential surge of new foreclosures coming to the market. There are clearly foreclosures happening again, but it's too soon to tell what the balance will be between buyers and sellers. For now, sellers rule. I have some additional information about Sonoma County REO Days on the Market and sales prices relative to listing prices on my reo.sonoma.net blog.

May the "Find the Right Buyer Force" be with me.

I'm hoping that I can make a happy merger between two common sayings.

On one hand we have the real estate truism, "Location, Location, Location." If you have been in this business for any length of time, you know it's true.

On the other hand we have folk wisdom expressing the view that "It takes all kinds". That's also true as all of us who have worked the floor and the phones can verify. One person's honey is vinegar to someone else.

The reason I need to merge these sayings is that I've got some great listings for acreage that are both literally and figuratively "all over the map".

High Traffic Sites

I just know my Highway 101 frontage parcels require buyers with business interests that require public attention. For our wine country location in Healdsburg, Sonoma County, the most logical buyers would be wineries or vineyard operations. Another great possibility would be one of the many high quality vineyard management operations already working or just getting started here. It's no secret that farming grapes is a lot of work and a highly specialized task. A frontage location for a vineyard management operation would be a great way for a new entrant to get known or for a known busines to cement their reputation with a vintage location.

Another high visibility possibility is to look for someone from the equestrian community in Sonoma County. It's a diverse group with interest ranging from endurance events to showing, quarter horses to thoroughbreds (Sebastopol's great Cavonnier finished second in the 1996 Kentucky Derby). It's an active and numerous community. The current owner of the property has made horse-oriented improvements including a great barn and stable setup. There are plenty of professional horse trainers and serious amateurs who might like a visible operation with great access to the freeway and side roads.

Country Estate Sites

On the "it takes all kinds" conundrum, I've also got some wonderful acreage that's too rugged for farming or grazing, but perfect for residential estates. Great views, wonderful park like setting, and both fixer houses or tear down and start over dwellings. These are as quiet and private as the other ones are public. I know that no  single client is going to be interested in both types of property, but my marketing as a whole can't leave one or the other out. So, I blog about them, post them on the internet where I can, and try to find the special buyers who will each love the one they want with their whole being.

If any of you out of area agents have buyers looking for a wine country life near Healdsburg, please refer them to me and I'll take good care of them

Putting people to work, saving energy, and upgrading our building stock are all great ideas. If we can get there by stretching a dollar 14 times those great ideas start to make too much sense to ignore. The principle is to leverage the federal stimulus money that cities and states are getting by buying down interest rates for loans to increase energy efficiency. Ed Mazria, a Santa Fe architect, has a plan. The 14X plan is meeting an enthusiastic reception in presentations to mayors and other local officials.

"You could almost see in the audience light bulbs going on as he put flesh on the skeleton of his concept," says Mayor Patrick Hays of North Little Rock, Ark. "It was like a preacher giving a sermon and by the end we were singing out of the same hymn book and there were ten or twelve of us lining up to be baptized."

Sonoma County already has a Go Solar program designed to make solar energy and efficiency improvements. The 14X plan is another example of smart spending where governments encourage private citizens and businesses to do the right thing. If you want your community to get involved in this kind of work, the best thing I can do is steer you to the people who are doing the research and documentation.

The Architecture 2030 organization is so efficient, they have already provided a form for local governments applying to get their funds from the stimulus. If you want your town or county to take part in this smart spending of stimulus funding, get them to the Architecture2030 web site now.

On Friday HUD issued a press release announcing a change in strategy for the first time home buyer's tax credit. Instead of just being available after the purchase, the $8,000 credit can now be applied towards a down payment or closing costs. This change will assist in the sale of hundreds of thousands of homes, both to first time buyers and for move up buyers who will find it easier to sell their home to first time buyers. 

There will be lots of details to make this into a working program rather than just an announcement of intentions, but this is excellent news for many first time buyers.

Official government information:

Using First-Time Homebuyer Tax Credits for the Downpayment (Word Doc)

Attachments:

• IRS Form 5405 (PDF)
• IRS Tax Credit Summary

For those people who are already in the middle of a transaction, keep in mind that you can file an amended 2008 tax return and get your money rather than waiting until the end of the 2009 tax year. The IRS has more information about amended returns and other options.

We get a lot of out of town buyers at our Healdsburg Sotheby's International Realty office. Many come from cold weather states where spring is a short season between too cold and too hot...and bugs. One of my joys as an agent is sharing stories about gardening in this land that Luther Burbank celebrated as "the chosen spot of all this earth as far as Nature is concerned".It's not a hard sell to talk about gardening in January; wearing shorts.

These thoughts about gardening as a key reason to relocate to this area came to me as I was walking past some of my fragrant plants and got a cinammon burst from some purple petunias. I've got alyssum and petunias in planter boxes along my entry walk and it's a great feeling to inhale their scent as I pass by. It's a lot easier to stop and smell the roses (or other great plants) when you have roses where you can smell them. 

My garden is full of color, but for some reason I noticed how many white flowers were in bloom right now. I've got the usual array of plants, but I have a hawthorn tree with beautiful flowers that are just at their peak. I normally don't put this big an image in my posts, but a lot of readers have probably never seen a hawthorn flower up close. They're pretty spectacular. I like this tree because it's thorny branches keep cats and bigger birds away from my hummingbirds and smaller finches.

The other plants that have been great this spring are the snapdragons. I've had some second year snaps that have grown as big as a small rose bush. They're getting tired and leggy at the moment and I'm ready to retire them until next fall, but I've enjoyed them since January. To all of you Chicagoans and Minnesotans, I'm not kidding. You really can garden in January in Sonoma County.

Three months ago, I ruled the world. My strong buyers could pick up any Sonoma County property they wanted for good discounts off the list price. I still have great buyers, but finding a property to offer on is tough. Harder still is going up against as many as a dozen other buyers...in two days after a listing hits the market. This is going on in many places, but the ground zero for vanishing inventory and a seller's market is Rohnert Park.

A picture is worth a thousand words, but I don't know if that applies to pictures of words. It's the best I can do to show the situation in Rohnert Park, both for REO properties and open market sales. The screen capture below is for a Hot Sheet. For my readers who aren't real estate professionals, the Hot Sheet is a snapshot designed to show what's going on right now. Most often it would be used to see all the new listings in the past day or week. In this case I stretched the Hot Sheet back a full 30 days to look at single family homes under $325,000 in Rohnert Park. I chose the price since several of my buyers want to stay under that number to keep their monthly payments comparable to renting (around $1,500 per month).

The bottom line is that of the 13 listings showing up on the Hot Sheet, ten are contingent sales and three are already gone. Taken. Absorbed. Bought. Ripped from my grasping hands. No leftovers saved for me. None of the houses listed in the last 30 days are available. However you want to put it, the sellers in this market are getting lots of offers and buyers are getting lots of grief. If this sounds like complaining, it is. But I don't really mean it.

In the real world, I loudly celebrate the return of an acutal real estate market where buyers and sellers cooperate to determine fair market values for their property. We haven't had an actual real estate market since the bubble burst and REO properties flooded onto the market in record numbers. Is this seller's market here to stay? I don't think anybody can say for certain, but along with my other posts talking about market bottoms earlier in the year, this is one more confirmation that we are moving back into familiar territory. I think everyone can breathe a sigh of relief that the worst might be over.

I wrote about the red hot REO market in Windsor, California about a month ago. I thought it would be interesting to go back and revisit some of the key ideas to see if the market is just as active. Well, it's great news for the real estate industry in general. For the bargain hunters it's getting harder and harder to be a successful buyer for a foreclosed home in Sonoma County. The REO inventory is flying out the door and isn't being replaced fast enough.

A month ago there were 12 active listings for foreclosed homes in Windsor. That number is now down to 8 bank owned homes on the market. During that same month, 24 REO listings have sold, 5 are pending, and there are 14 contingent sales in the works. The math is simple. We have barely a week's worth of inventory available for buyers looking for REO homes. Clearly, we won't run out in a week. The current listings average 55 Days On Market, so it may be these last homes lack curb appeal or aren't priced right. Whatever the case, it's clear that buyers for single family homes in Windsor are going to have to look at either short sales or open market sales.

In that context of a hot market for REO property, I am pleased to announce the long awaited return of open market sales in Windsor. There are 29 homes for sale in Windsor that are neither short sales nor REO listings. For the first time in more than a year, the majority of homes on the market are traditional real estate transactions with private owners. The fact that makes this market possbile is the high number of buyers of REO properties that have cleared the gutted market to make way for the new reality.