In an effort to raise the necessary funds to complete the long-planned La Pata/Vista Hermosa Community Park, the City Council of San Clemente has approved the sale of 14.8 acres of land adjacent to the development's site to Target.  According to this article in the San Clemente Times, the sale will be for $13.8 million, with all proceeds from the sale contributing to the construction of the park.  If the deal is finalized, this will bring the total alloted amount of money set aside by the city for the park to $32.8 million, which covers the $32 million cost estimate of constructing this new park.

Obviously this is fantastic news for San Clemente residents and visitors.  The corner of Avenida La Pata and Avenida Vista Hermosa has long displayed signs of this proposed project, but like the long-delayed Marblehead Coastal development, the money has not been there to begin and finish construction.  Now that the City Council has approved the land sale to Target, not only will residents and visitors be able to enjoy the various sports' fields and state-of-the-art aquatic's center, but San Clemente will be gaining a great store in Target.  This will add more jobs to the area, both in construction and running the new Target, which can only be a good thing in these tough times.  The park will be a fantastic addition to the city of San Clemente, and a new Target is just icing on the cake.

To learn more about the La Pata/Vista Hermosa Community Park, including the proposed layout and features of the park, please visit this website.

To combat a large budget shortfall in the parks department after the new California state budget was recently adopted, state parks have decided to increase their fees to raise money in an effort to prevent closures of up to 100 parks.  In yesterday's Orange County Register, this article highlighted the increases pertaining to San Clemente State Beach.  Day use camping has increased by $5 per day, and tent camping sites have increased by $10 per day.  RV camping saw the largest increase, going from $34 to $60 per day.

While price increases in a bad economy are never a good thing, in this case the ends definitely justify the means.  One of the great things about being a California resident is our access to a variety of campsites and recreational areas throughout the state.  From the mountains to beach camping, this is a relaxing and affordable way to take a vacation and makes California such a great places for residents and visitors alike.  With California in a budget crisis, the state legislature had to make cuts to a variety of areas, including $14.2 million from the parks department.  Facing potential closures of up to 1/3 of the total state parks and recreation areas in California, the department was left with no choice but to increase fees.  To risk the closing of 100 of these natural treasures is something this state should avoid at all cost.  I for one would be very disheartened if my wife and I would lose the ability to take our yearly camping trip to San Clemente State Beach.  Even though we now have to pay a little more to enjoy this fantastic place, the thought of losing the ability to go there at all makes the extra cost an easy decision and investment into our struggling parks department.

For more information on California state park fee increases and potential closures, please visit the parks department's official website.

According to the San Clemente Times, NY Firm D.E. Shaw has bid $195 million to buyout some of SunCal Properties, including Marblehead Coastal, after the bankruptcy of Lehman Brothers.  Marblehead Coastal real estate will be one of the last new developments along the Orange County coastline and encompasses 247 acres on the western side of Interstate 5 between Avenida Vista Hermosa and Avenida Pico.  The hearing regarding this bid is expected to occur in October.  Hopefully this will bring back life to this fanastic development to come offering custom lots with ocean views, villa style homes, and new upscale dining and shopping.

For more information about Marblehead Coastal, please visit our page exclusively dedicated to this new development or give your exclusive San Clemente realtors a call at (949) 281-5444

According to the San Clemente Times, a group of San Clemente residents are planning legal action against the City of San Clemente if they do not resolve the increased level of train noise due to the pedestrian crossings along the Beach Trail from North Beach to Calafia.  There are currently five beach crossings along the path and as mandated by Federal Law in 2006, trains are required to sound the horns no matter the time of day when crossing over these pedestrian crossings.  The group QUIET - Quit Using Intense Ear-Splitting Train noise) is not after money, but rather is after the peace and quiet so they can get a good night sleep along this beautiful stretch of ocean front San Clemente real estate.  The head of the group claims the city of San Clemente knew about the issues and failed to take any action.  The solution is to underground the pedestrian passes so the trains would no longer have to sound their horns along the coastal corridor, each of which would cost around $500,000 or $2.5 million in total.

For more information, please visit the City of San Clemente website.

If you own San Clemente real estate, including Talega real estate, and are deliquent on your payments, you may qualify for a mortgage modification under the Obama administration's housing stabilization plan.  According to the article on CNN "Mortgage modifications are happening. Get Yours", the following five simple steps are all you need to complete in order to stay in your San Clemente home or condo:

1. Visit the website MakingHomeAffordable.gov where everything you need to get started is located
2. Take the quiz to find out if you are eligible, meaning you bought your house before January 1, 2009, it is your primary residence, you owe less than $729,750, your payments are more than 31% of your monthly gross income, and you are deliquent on payments.  If you qualify based on these requirements, an eight item checklist of paperwork will need to be completed.
3. Complete all the required paperwork
4. Call your lender or the company you write your monthly mortgage check to and find out if they are participating in the plan, and if they are, you will be required to fill out an application and submit your documents
5. Wait for approval.  During this stage the lender will decide how to reduce your debt by either lowing your interest rate, extending the term of the loan, or reducing the amount you owe.  The lender will first bring your debt balance down to 38% of gross income and then the government will cover the rest by bringing it down to 31%.  Your loan will now be rewritten, you will sign new paperwork, and the new payment will go into effect on the next bill.  This can take several weeks to a month.

For more information on this program or about San Clemente real estate, please do not hesitate to contact us!

San Clemente real estate currently has 473 homes and condos for sale with 142 or 30% being distressed properties - short-sales and foreclosures / bank-owned.  The Talega real estate market currently has 86 homes and condos for sale with short-sales and bank-owned properties accounting for 40 or 46% of these.  There is a higher concentration of foreclosures and short-sales in the Talega real estate market due to it being built out from 1999 to the present.   In terms of distressed properties west of Interstate 5 and east, only 23% of the properties are short-sales or foreclosures west of the freeway while 34% are east. 

For more information on San Clemente short-sales and foreclosures, please contact us or visit our exclusive San Clemente short-sale and foreclosure page.

For those of you who are currently looking to buy in the San Clemente real estate market, you may want to consider buying new development, the majority of which is located in the Talega real estate market.  The state of California is currently offering a $10,000 tax credit if you buy new development.  In order to obtain this credit, you must:

• Purchase new development that has never been occupied before
• Live in the residence for a minimum of two years
• Purchase before March 1, 2010
• Submit your application for the credit within one week after the close of escrow
• Be eligible for the property tax homeowners exemption under CA Revenue and Tax Code Section 218

While the credit is available until March 1, 2010, you may want to act quickly as the state of California has only allocated $100 million to this fund and approximately $50 million has been used to date.  In addition, builders such as Standard Pacific out in Talega are still offering great incentives to purchase.  While you could walk directly into their sales offices, we recommend contacting us first as the sales agents for these developments work for the builder and have the builders best interest in mind and not necessarily yours.  We will be able to directly negotiate on your behalf in order to obtain the best purchase for the property based on your needs, recent sales in the neighborhood, and current market conditions.

Also, if you are a first time homebuyer, you may want to act by summer time in order to take advantage of the $8,000 tax credit offered by the government if you close escrow by November 30, 2009.  This means as a first time buyer you would receive a total of $18,000 in tax credits, $10,000 from the state for buying new development and $8,000 for being a first time buyer purchasing before the end of November.

For more information on this credit, please contact us or visit the following link:  Tax Credit for New Home Purchase

In addition to the enticing benefit to purchase San Clemente real estate with the $8,000 tax credit for first-time homebuyers (i.e. have not owned in the past three years), the California Association of Realtors recently launched a new program to help ease the nerves of first-time homebuyers who are afraid they may lose their job and be unable to pay their mortgage after they purchase a home.  The program, known as the Housing Affordability Fund Mortgage Protection Program, allows first-time homebuyers who lose their job due to a layoff to receive $1500 per month for up to six months towards their monthly mortgage payment.  In addition, a qualified co-buyer can also participate in the event of being laid off and receive an additional $750 per month.  So if you and your co-buyer both lose your jobs, you could receive up to $2250 per month for up to six months to help pay for your mortgage.  This is a significant supplement on top of severance and/or unemployment benefits to help you get through such a difficult event.  In addition to these benefits, this new program also includes a benefit of $10,000 in the event of dealth and coverage in the event of a disability. 

In order to qualify for the Mortgage Protection Program, you must:

• Be a first-time homebuyer (i.e. someone who has not owned in the past three years)
• Use a California Realtor in the transaction
• Purchase the property in California after April 2, 2009 and close the transaction before December 31, 2009 (i.e. go into escrow no later than November 15 in the event a 30 day escrow is delayed)
• Be an employee that receives a W-2 (self-employed and military unfortunately do not qualify; though military qualifies for a VA loan)

If you are a first-time homebuyers and would like to take advantage of this new program in addition to the $8,000 tax credit offered this year and interest rates at or near all-time lows, please contact us and we will gladly assist you in starting the process by providing you the program's application.

Why have the prices of San Clemente real estate dropped substantially over the past year and since the top of the market in 2006?

Due to the anomally during the market boom when prices appreciated nearly 100%,  prices are now adjusting for the inconsistent and nonsustainable growth of the first six years of the decade and towards a healthier market of stability where various income ranges can actually afford homes in the market through conventional financing.  Rather than the majority of buyers being financed through exotic mortgages that were high risk, required little due diligence on the part of the lender for approval, and that the average consumer did not understand or could even afford, we are now on the opposite end of the risk spectrum and moving back towards normal markets.  As a rule of thumb, the median income in a housing market should be able to at least afford to purchase an average condo, otherwise you have too few buyers and too many sellers that results in downward pressure on prices.  This is fundamental economics of supply and demand that determine prices!

How do I determine the direction of prices in my market?

While there are no solid rules, months of supply is a solid indicator.  5-6 months of supply indicates a stable market, 7-8 months of supply indicates single digit depreciation, and 9-10 months indicates double digit depreciation.  On the other hand,  3-4 months indicates single digit appreciation and 1-2 months means double digit appreciation as buyers are fighting over a smaller supply of homes, and therefore, pushing home values up.  For April 2009, the inventory of San Clemente real estate cotinues to move back towards a stable market as current homes under contract are up 109% and new listings are down nearly 25%.  A year ago, inventory was above 12 months. 

Why should I buy now?

An investment no matter what, follows a typical nine stage cycle.  Lets start in the middle of the cycle with optimism that turns into excitement and eventually becomes euphoria with all the hype.  Euphoria (i.e. irrational excuberance) we have seen in the dot-com era of the late 90's and then in the real estate era of the early 2000's.  We should all know by now that euphoria eventually results in a market downturn causing denial, then fear, panic, and ultimately despondency and depression (where we are in today's market).  Nevertheless, this cycle returns back to optimism in the end and we begin the market cycle all over again.  As a comparison to the real estate market and to illustrate our example of market cycles, lets look at Bank of America stock.  Earlier this year with all the negative news about the market and in particular bank stocks, this stock hit a 52 week low of nearly $2.50 per share.  While Bank of America represents one of the most solid banks in our country (after taking into account the subprime mess), there was complete panic about what was going on with the banking sector and the fundamentals of what makes a solid company or solid investment were forgotten by investors.  Today, the same stock after some positive news in the market, is trading near $9 per share or up over 300% from its low (its 52 week high is in the $40 range).  While you may be thinking I should have invested (this is not a stock recommendation), the point we are making is that the point of greatest opportunity to capitalize on investments is in the despondency and depression stage (i.e. today's market).  Since this is today's market, the  buyers who understand where we are in the cycle know now is the best time to invest in real estate.  These buyers know if they retain a long-term investment focus they will realize great returns in the end, especially given the long-term outlook for California real estate of projected statewide population growth of nearly 12 million or 30% by 2030 with little coastal real estate left to develop.  In the end this means a growth in demand for real estate and less supply that ultimately drives values up.  Again, this is basic fundamental economics!

Is homeownership really a good way to build wealth?

Real estate on average has appreciated 8-9 percent per year in California or 4-5 nationally.  While this is a decent return, the better way to evaluate your real estate investment is based on the amount of cash you put into your home and the return on this, also known as a return on equity or return on investment.  For example, a buyer that puts $50,000 into a $500,000 home that appreciates conservatively 5% per year in California will see their home being valued at $525,000 over one year or an increase of $25,000 on their $50,000 invested.  This represents a 50% return on equity in just one year.  Stocks and bonds as a comparative on average generate returns of 7-12%, and therefore, this is why real estate is a great investment as it can be leveraged (i.e. financed).  While transaction costs can be much higher for real estate and it is not as liquid (i.e. cannot be sold as quickly as stocks and bonds), a long-term focus on real estate investing will ultimately provide a well balanced portfolio with other investments in order to hedge your risks.  In addition, owning real estate is one of the greatest tax savings that one can realize each and every year.

For more information on San Clemente real estate, please contact us for a free consultation.

While getting pre-approved is a must in today's market in order to purchase San Clemente real estate, buyers need to be particulary careful not to alter their credit until the purchase is final.  Making the wrong move after getting pre-approved could result in your entire purchase falling apart.  In order to ensure your loan gets funded during the purchase process, follow these tips:

• Do not change jobs.  One factor mortgage companies consider is the length of present employment as part of your risk profile and job stability is a key factor.  Even if the new job may be higher paying, try and wait if possible until you move into your new San Clemente home.
• Continue making your payments on time.  Do not be late on any payments and if you are, contact your creditor and ask if they can remove the late payment.  Often times creditors will grant this on a one-time basis.  Keeping your credit report clean during the process is crucial.
• Keep credit card balances low.  If you push your credit limits to their max during the process of funding your loan, this will seriously impact your credit score.  If you fail to keep your credit limits low, this may come up during the final review of your file before funding your loan.
• Do not take on new debt.  While it may be tempting to start taking on some of the big purchases for your new home, do not  do so until after you close your sale.  Taking on new debt during this time may drastically effect your debt-to-income ratio and result in a failure to obtain financing for your purchase.
• Communicate with your lender.  Always be available during the loan process as the processing staff may need to contact you for additional information, so be sure to inform your lender if you will be out of town or unavailable.
• Tell your financial story upfront.  Tell your lender about any past issues with finances, such as late payments and exactly what assets you have. Lenders understand that life events happen that can result in financial issues.  Not being honest up front will result in the lender finding out about issues down the road when your credit report and assets are reviewed.

For more information on financing for your San Clemente real estate purchase, please contact your exclusive San Clemente realtors today.