In
an effort to stimulate housing demand, President Barack Obama
included a tax credit of up to $8,000 for certain first-time home
buyers in the $787 billion economic stimulus package he signed
in February.
Only
buyers of principal residences who make purchases before December
1 and have an adjusted gross income of $75,000 or less (or $150,000
for married couples) are eligible for the full credit.
We are experiencing a boom real estate market starting this March
right after the law is in effect. Falling
home prices have worked their magic and the tax credit has played
a key psychological role in pushing buyers off the sidelines.
The
tax credit is one of a number of factors that have worked to bolster
the housing market in recent months especially entry level home
that is priced below half a million dollar in our area.
The
federal tax credit of $8000 to the first time home buyer is about
to expire on 11/30/09. Although the credit's deadline isn't until
the end of November, buyers may need to make an offer on a house
by the middle of October to take advantage of it since
it will take about 30 days to close an escrow.
Unless
the tax credit is extended by lawmakers, this will be the last
chance for the first time home buyer to secure a home at an unbelievable
low market price (comparing the price from last year) with a great
tax incentive.
One
of the most common concerns from buyers is the condition of the house. Buyers
do not want to end up with a house that has lots of problems.
To
avoid that, here are five steps to protect buyer's interest in the purchasing
process:
1.
Buyer's own visual inspection. Some of the problem can be easily spotted such
as broken windows, shifted foundation or mold.
2.
Agent's visual inspection reports. Both listing and buying agents will fill
out a separate report detailing what they see visually about the property and
give buyer a copy.
3.
Sellers are required to disclose certain types of information about the homes
they are selling. Sellers will provide a report to disclose condition of the
house.
4.
Professional home inspection detailing the condition of the property. Once the
defects are located, buyer can ask the seller to fix those problems.
5.
Seller will normally provide a one year home warranty plan to cover any plumbing,
electrical, pest control, air condition, water heater, roof leak, and/or Pool/Spa
equipment A
good agent shall be able to assist you in making that request when filling out
the purchase contract.
With
all the above steps performed, buyer can rest assured that no serious defects
are overlooked and can request for the correction prior close of escrow.
Due
to the $8000 federal tax credit to first time homeowners who purchase their
primary residences before end of the year, the demand on houses selling less
than $500,000 is very high causing a short supply on this type of housing. Buyers
who already know their area interests are in a stand by mode waiting for new
listings to show up on the market.
Inventory
level remains very low in Walnut, Diamond Bar, Phillips Ranch and Chino Hills.
It is below 2 months supply in Walnut and Diamond Bar and below 1 month supply
in Chino Hills and Phillips Ranch.
This
posts a great opportunity for sellers who need to sell their properties due
to various reasons to put the houses on the market to satisfy the huge demand
generated from the $8000 federal tax credit that will be expired by the end
of the year.
For
million dollar home buyers, it is a totally different story. Inventory level
remains high and price is very competitive. For example, this house in The Country,
an exclusive guard gated complex in Diamond Bar, with spectacular city lights
view and gorgeous swimming pool on 23509 Ridge Line was listed for sale for
$1,490,000 in 2008 and is now listed for $999,990. We are seeing as much of
50% price decline on million dollar homes.
For
buyers who need to sell thier smaller homes and upsize to a larger ones, it
is a great opportunity to maximize the selling price of their smaller homes
and capture the bargains of the larger ones.
Recently
I am seeing bank owned homes received 30-50 offers couple of days
after it was listed. Especially the ones that are in good move
in condition with lots of upgrades.
I
am also seeing overbidding on the bank owned properties at a price
that is substantially higher than the regular sales at market
price.
The
followings is a list of example of bank owned homes recently sold
to demonstrate this kind of emotional bidding.
No.
1 - 1955 Silver Hawk Drive, Diamond Bar
List Price: $549,900
Sold 18.6 % over asking price for $652,000 On 05/18/09
No.
2 - 1024 Summitridge Drive, Diamond Bar
List Price: $621,225
Sold 12.3 % over asking price for $698,000 On 06/17/09
No.
3 - 20133 Illuso Ave, Walnut
List Price: $400,000
Sold 12.5 % over asking price for $450,000 On 06/11/09
No.
4 - 3258 Olympic View Drive, chino Hills
List Price: $419,900
Sold 10.7 % over asking price for $465,000 On 06/26/09
We
were not seeing this kind of crazy bidding even during the
2003-2007 boom market. Before making an offer, ask your agent
to give you a list of comps in the area to help you decide on
the offering price. Appraisal website such as www.Zillow.com
is also a good place to double check and make sure you are not
overbidding.
Buyers
shall exercise logic and caution when submitting offer on bank
owned properties by utilizing facts and reasons to avoid paying
a price that is over the market price.
According
to Dataquick's newest report for California 2009 May Home Sales: "The
median price paid for a home last month was $230,000, up 4.1 percent from $221,000
in April, and down 32.2 percent from $339,000 for May a year ago."
California
Median
Home Price
May
2008
$
339,000
April
2009
$
221,000
May
2009
$
230,000
Buyers often
ask me whether the market price will continue to drop and want to find out
if this is the right time to purchase real estate. Savvy
investor knows the best time to make a purchase is when the market hits the
bottom and is on the process of rebounding.
So if we are
down 32.2% from last year and up 4.1% from last month, this may be the good
indicator to assist buyers in making their purchase decision.
Why
is it important to hire a agent who is familiar with the area
you are buying or selling instead of an out of the area agent
who is a trusted friend?
The
answer may be very simple.
1.
Convenience
Is it easier for a local agent to drive 5 to 10 minute or out
of the area one to drive 30 to 60 minute to the house for showing?
It is more practical to hire a local agent who is nearby due to
the showing convenience.
2.
Area Knowledge
On
top of that, the local agent who specializes in the area knows
the neighborhood by heart. They are familiar with the rating of
the schools, the crime rate of the area, and where the parks
and shopping malls are. Those local knowledge may require some
research if the agent is out the area and could be totally unaware
of.
3.
Pricing Knowledge
A
local agent who monitors the real estate market in the area is
familiar with the pricing of each home sold on a daily basis.
The agent understands the type of buyer for each type of house
from experience and can price the house accurately.
There
was one bank owned home in Diamond Bar for sale that is located
in a extremely busy main street in June 2009. It is difficult
to drive in and out of the house due to the street traffic. The
same house was sold frequently every few years. It was normally
priced about 10% below the market price in the past due to it's
functional obsolescence.
It was sold 8 days after it was listed at regular market price.
Buyers normally believe bank owned homes are good deals and especially
if the value of the property checked out with appraisal site such
as Zillow.com. This kind of situation could be easily prevented
if buyer is assisted by a competent local agent.
With
a good local agent working for you, it can help prevent selling
your house too low or buying too high. Therefore, it is to your
best interest to hire an agent who is familiar with the area you
are buying or selling.
Buy
a house in s good school district is one of the main reasons for family looking
for a new home in the summer. The
following is a chart of State's 2008 API school reports for Walnut, Diamond
Bar, Phillips Ranch and Chino Hills to assist buyers who are factoring the shcools
into their buying decision.
Below
is a chart of percentage housing price changes in Chino Hills,
Diamond Bar, Walnut and Phillips Ranch according
to the newest data published by MDA DataQuick, a company that
tracks housing price.
Unlike
most cities in Los Angeles where the 1 year percentage change
are still in the negative, Walnut
is up by 17.5%.
Why
is housing price holding so well in Walnut? Here
are the main reasons:
I.
Top Ranked Schools
Walnut
School District is famed for it's top ranked schools. For parents
who wants to send their school age children to great schools,
Walnut becomes a top pick.
II.
City's Effort To Minimize Over Development
With
City of Walnut's effort in opposing over development in the city
in the past decades, Walnut remains one of the nicest residential
cities to live in with minimal commercial traffic from outside
of the city.
With
excellent schools and city's effort in keeping it a small town
atmosphere, Walnut remains one of the most popular cities for
young family to settle down.
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