Copy for Real Estate Guide Column for 11-5-10
REAL ESTATE PATTERNS
By Ken DuVall

PASSING THE TORCH

It’s been a great run doing this column which started when I became President of the Chico Assn. of REALTORS in 2001. It began as the “President’s Corner” and evolved into “Real Estate Patterns” over the years. I’ve enjoyed every moment… until lately. I feel it’s time to give it a rest. I’ve been in this business since 1963.

I just don’t care to go on dealing with press deadlines. My doctor told me to start relieving the daily stress and watch the cooking channel instead of the news! I’m not going to do that but I do plan to slow it down some. However, my office and website will remain active for your convenience. Feel free to call me anytime.

Therefore, my colleague and good bud Doug Love has agreed to take over this column spot for me. Doug entered our business at my urging some 20 years ago. He and I were roomies at Coldwell Banker DuFour Realty for 10 years. He is deserving of your support.

After a stint as Sales Manager at Century 21 Jeffries Lydon, Doug took over that spot a decade ago. He is one of the most knowledgeable and competent professionals around and a totally appropriate protégé/successor for me here. He is the essence of what a REALTOR should be.

I have no doubt that Doug will continue in my tradition and keep you informed. He has his finger on the pulse of our Chico housing community. It’s altogether fitting and proper for him to follow in my footsteps. Doug is just what the doctor ordered.

So ya’ll keep those cards and letters a’comin’! Love, and may God bless you all. Try and keep the Faith. Drop on by and I’ll bake you a cake!!

Ken

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-29-10

REAL ESTATE PATTERNS
By Ken DuVall

BUYING A HOME MAKES GOOD SENSE

Nearly 8 of 10 respondents believe buying a home is a good financial decision, despite ongoing challenges with the economy and housing market. That’s according to the 2010 National Housing Pulse Survey, an annual report released by the National Association of Realtors. The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in 8 years of sampling, with 70% of Americans saying that job layoffs and unemployment are a big problem in their area. So what else is new?!

“The real issue facing the nation’s economy right now is that many Americans can’t find meaningful work to support their families,” said NAR President Vicki Cox Golder. “While job recovery is what’s needed right now to get the economy and housing market back on the right track, owning a home continues to be part of the American Dream and one of the best long-term investments in your future.”

Despite economic uncertainty, 68% of those surveyed still believe now is a good time to buy a home. While that number is down from last year (75%), it’s up from 2008 (66%) and 2007 (59%). Lower home prices and record-low mortgage interest rates are attracting buyers. More than 25% of renters said they are thinking about buying a home than they were a year ago. Sixty-three percent of renter respondents said that owning a home is a priority in their future, and 40% said it was one of their highest priorities. Lower home prices have improved affordability. Demand never stops.

Despite improved affordability, 79% of respondents still consider having enough money for down payments and closing costs to be among the biggest obstacles to buying a home. Another is a lack of confidence in their ability to be approved for a loan, reported by 73% of respondents. It’s a real challenge to get a loan anymore.

The good news is that Americans are seeing more stability in the real estate market. Nearly 70% believe home values have stabilized in their area. The same number expects home sales to remain about the same through the end of the year. But there are still many issues in play here.
Thirty-six percent of respondents cite the recession, loss of jobs, and the poor economy as the main reason for the ongoing foreclosure dilemma. While 70% say it’s harder to sell a home in their area today than it was a year ago, it’s less of a concern from last year when the number was 10 percentage points higher, the result of somewhat lower home inventories now.

The 2010 National Housing Pulse Survey was conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program among 1,209 adults living in the 25 most populous metropolitan statistical areas. The study has a margin of error of plus or minus 3.1 percentage points. All things considered, I’d say we’re looking more good than bad at this point.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-22-10
REAL ESTATE PATTERNS
By Ken DuVall

CALIFORNIA ASSN. OF REALTORS HOUSING FORECAST

Not surprisingly, weaker-than-expected economic recovery will result in a projected decline in California home sales for 2010, although sales are expected to edge up slightly in 2011, according to C.A.R.’s Forecast released this week.

It says California home sales for 2011 are projected to increase 2% to 502,000 units compared with 492,000 units (projected) in 2010. After 2 consecutive years of record-setting price declines, the median home price in California will increase 2% in 2011 to $312,500, according to the forecast. So be it.

“As the U.S. economy continues its tepid recovery, we’ll see some improvement in California’s economy,” said C.A.R. Chief Economist Leslie Appleton-Young. “We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and a decrease in unemployment.” Amen to that. Our unfortunate construction workers represent a huge percentage of the jobless.

“A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited attractive financing will cause continued softness in the high end. There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties,” per Leslie.

“The wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of any economic recovery,” said Appleton-Young. “What is certain is that favorable home prices and historically low interest rates will continue to make California homeownership attractive for those who are in a position to buy.” Chico homes are a bargain today. There are a lot of distressed properties here too.

Foreclosed homes accounted for a heretofore incredible 24% of all residential sales in the second quarter of 2010, RealtyTrac reports. The average price of foreclosed properties was more than 26% less than the average price of non-foreclosures. Banks have foreclosed on 3 million U.S. homes since 2007.

Nevada, Arizona, and California posted the highest percentages of foreclosure sales in Q2.Foreclosures accounted for an enormous 43% of all sales in California, the third highest among the states. California pre-foreclosure sales (short sales) increased 8% from the previous quarter, but were down 4% from the second quarter of 2009.

California bank-owned sales increased 1% from the previous quarter but were down 45% from the second quarter of 2009. Lenders with foreclosure discrepancies nationwide, the latest shoe to drop in a growing fiasco, calls into question whether large financial institutions sufficiently documented the vital details surrounding repossessed properties. What a colossal nightmare.

Our already fragile housing market certainly didn’t need any more problems, and the full ramifications of this situation are not yet clear. What is clear is we still have a substantial backlog of foreclosed properties- with some 10 million more in the hopper- that may at some point hit the marketplace. Bottom line: The overall housing dilemma is not going be resolved for several years. As always: buy on bad news, sell on good.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-8-10
REAL ESTATE PATTERNS
By Ken DuVall

ENOUGH WITH THE DOOM AND GLOOM

Sure, there's more pain to come in the housing market. But when Time Magazine starts declaring "Owning a home may no longer make economic sense," I’m not buying it. It’s grim, but we’re not dead and buried yet.

At the peak of the bubble 5 years ago, Time had a different take. "Home Sweet Home," declared its cover as it celebrated the boom and asked: "Will your house make your rich?" But now’s not the time to give up the ship. Here’s some reasons why it's always good to own a home.

You can get a good deal now. It’s clearly a buyer's market. Many buyers vanished as the tax credits expired. We're 4 years into the biggest housing bust in modern history. Prices have dropped about 30% from their peak. You'll never catch the bottom, believe me. And it really doesn't matter over the long haul.

Mortgages are the cheapest in 50 years. You can get a 30-year loan for around 4%. Two years ago they were over 6%. That drop slashes your monthly payment by 20%! We may never see these rates again in our lifetimes.

Beat the IRS! You can deduct the mortgage interest and real estate taxes from income. And you'll get a tax break on capital gains when you sell, more valuable the more you earn, and the bigger your mortgage. Many people will find that these tax breaks mean owning costs them a lot less than renting.

It also offers inflation protection. History tells us that housing has beaten inflation by a couple of percentage points annually. That's important, especially if you think long term, the next 30 or 40 years. Real estate is not a get rich quick scheme. On the contrary, it’s a get rich slow scheme!

It's a forced savings plan. If you rent for $2,000 month vs. owning for $2,400 a month, renting may make sense. But will you then save that $400 difference for your future? Most people won't. Realize that the part of your mortgage payment going to principal repayment isn't actually a cost. It’s building equity, the difference between what you owe and market value. As a forced monthly saving, it sure beats rent down the drain. My Dad told me, “Pay yourself first every month and you’ll be fine.”

Yes, there’s a glut of homes today, which can work for you. The National Association of Realtors puts the current inventory at around 4 million homes, below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More foreclosures keep coming onto the market as jobs are lost, and banks continue unloading their unsold properties. But for those fortunately still employed buyers, that means great choices and great prices.

Sooner or later, the market and supply and demand will meet again. Our population is forecast to grow by more than 100 million people over the next 40 years, meaning some 40 million new households needing homes. Eventually, this housing glut will work itself out. Keep the Faith and take advantage of the Great American Dream while the getting is still good! Timing is everything.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 9-24-10
REAL ESTATE PATTERNS
By Ken DuVall

MORTGAGE FRAUD ON THE RISE

New data shows that mortgage fraud- which got tougher to pull off after the collapse of the housing market- is returning in a big way.

The Wall Street Journal reports research firm CoreLogic examined 7 million home loans made by hundreds of lenders showing losses from mortgage fraud, ranging from falsified credit reports to identity theft, rose 17% last year after declining 57% in the previous 2 years. In 2009, $14 billion in U.S. home loans were originated using fraudulent application data. The actual losses won't be known for several years until the banks become forced to write off the bogus loans.

The FBI in June indicted a Phoenix man for mail and wire fraud among other crimes when he tried to steal a house from his landlord! Also in June, federal prosecutors in New Jersey charged 29 defendants—including 12 real-estate agents, 4 mortgage consultants, an appraiser, a bank employee and a mortgage broker—with wire fraud in a scheme involving 17 properties in the state showing losses of $5.5 million.

In one common con, scammers recruit "straw buyers" accomplices with good credit to apply for "no-doc" loans, which require no documentation or proof of income, to “buy” their house. Good credit was required because lenders do at least check a borrower's credit score, even if they didn't require pay stubs or bank statements.

When the bank funded loans, the schemers and the fake buyers would split the profits and walk away, leaving the house to fall into foreclosure and the banks stuck with the losses. No-doc loans are a thing of the past. Lenders now require borrowers to furnish proof of employment, tax forms, credit reports, bank statements, etc.

But fraudsters have adapted to those new restrictions. With banks less apt to lend to borrowers with shaky finances, criminals rely more on falsifying documents, recruiting loan officers and other bank insiders to work for them, and stealing identities to get loans.

According to one federal indictment unsealed in June, while a Mr. Buencamino was renting a Mr. Weaver's house in Phoenix, he intercepted mail for Mr. Weaver, obtaining his social security number. He then got a driver's license in Mr. Weaver's name!

With the help of a friend working as a loan officer at a local Compass Bank branch, Mr. Buencamino obtained a $245,000 cash-out mortgage on the property. A homeowner using a cash-out mortgage refinances the loan for more than the current mortgage and pockets the difference in cash. Mr. Buencamino, not surprisingly, couldn't be located.

Fraud continues to be a pervasive issue, growing and escalating in complexity. Application fraud—in which borrowers falsify their names, where they live, how much money they earn, their employment, their debt or their assets—remains high, accounts for 59% of all mortgage fraud.

One of the defendants in a New Jersey FBI dragnet, a mortgage consultant, paid accomplices $15,000 apiece to steal the identities of local residents earning $90,000 or more and who had good credit ratings. She then used those identities to obtain 2nd mortgages on a number of homes in the Newark area. But since good credit ratings are no longer enough to get a mortgage, the defendant also needed insiders actually employed by the lenders to pull off the caper.

When the going gets rough, the rough turn crooked. Watch your back, people. Guard your identity.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 9-17-10
REAL ESTATE PATTERNS
By Ken DuVall

TRIAL BY FIRE

As the economy sputters and home buyers view the market with uncertainty- July home sales sank 26% from July 2009- there’s a growing sense of fatigue with all the government intervention. Many economists and analysts are now urging a dose of shock therapy. One of them is quoted as saying, “Let the housing market crash!” Is he serious? It already has crashed! Get real. We just need to return to the basics now in these difficult times.

With home prices as low as they are, same experts argue buyers should be pouring in, which the government envisioned with the billions they’ve already spent. Since October ’08 we’ve not been in your garden-variety recession. We are in the aftermath of a true financial crisis, the nastiest, most protracted kind of recession in many years.

“Housing needs to go back to even more reasonable levels” says Professor of Real Estate Finance at George Mason University. “If they continue trying to stimulate the market, that’s the definition of insanity.” In a nut shell, nothing we’ve done so far has had a long term positive effect. The administration bet that a rising economy would solve the housing problem, and now they’re out of chips. DC insiders secretly admit they are deeply worried and don’t really know what more to do.

Last spring’s housing tax credits cost taxpayers some $30 billion, much of which went to people who would have bought anyway. If the credits were supposed to bridge over a rough patch, it ended with a glimpse of an abyss. With a huge current inventory, homes now take many months to sell, with even more foreclosures- the “shadow inventory”- lurking in the background as job layoffs continue.

Says housing analyst Ivy Zelman, “We’ve had enough artificial support and now need to let the free market do its thing.” I agree. Last week Shaun Donavan, U.S. Housing Secretary, said, “The administration would go everywhere we can to help the housing market”, while other officials backpedaled and distanced themselves from his views. With all the different opinions out there, what’s a person to think?

I don’t see where anything has radically changed in home buying and selling since 1963 when I got in the business. To be sure, prices are unstable and weak now. Loans are tough to come by. But there’s never been any change in defining the term “true value”.

You combine a motivated seller, a qualified buyer, a willing lender, along with a righteous appraisal, and voila! There’s your true market value. No one is going to pay more than market value for any commodity. Prices go up or prices go down based on the marketplace at any given point in time. That’s always been the deal.

Yet people are going to need a roof over their heads, right? Kids keep being born; people need bigger or smaller homes; they move, etc. Life and houses will go on forever. It’s still a simple matter of supply and demand and haggling over price. There never was a better time to buy than right now.

In all honesty, I’ve got to say I’ve never seen people and things so gloomy before either, so you’re not alone feeling that way. But this is America. We shall endure. It’s just a different ballgame today. It’s time to take a 7th inning stretch!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-3-10
REAL ESTATE PATTERNS
By Ken DuVall

VACANT HOMES POSE INSURANCE RISKS

As the U.S. housing market struggles to rebound, many homeowners are stuck with hard-to-sell properties longer than expected. Some frustrated home sellers who must relocate for a new job opportunity, want to downsize, or simply want to buy a new place have left homes empty. Vacant or unoccupied homes can leave the homeowner exposed to loss and liability that may not be covered by their insurance.

In many cases, people who have been trying to sell their homes for awhile have moved forward with their plans regardless, leaving a vacant home on the market. Having an unoccupied home can create several insurance implications that typically are not covered under a standard homeowner’s policy.

Homeowners policies are meant to insure homes that are occupied, so they generally include exclusions for neglect or property abandonment on a home left vacant or unoccupied for a specified number of consecutive days.

In insurance terms, a vacant home is one the resident has moved out of and taken their belongings with them. An unoccupied home is one where the resident is not staying at the home, but the furniture and other belongings remain.

Because vacant and unoccupied homes pose a higher risk for damage than occupied homes, insurance companies insure these properties differently and usually at a higher price. These risks include:

Break-ins: When a home has been unoccupied for awhile, it can show signs that nobody is around - unkempt lawn, full mailbox, no lights on - that can tip off burglars to an easy target.

No emergency response: Without anyone home to call 911 or respond to emergencies such as a small electrical fire, can turn into a much larger, more costly disaster.

Property liability: There is no one present to prevent others from entering the property or to supervise activity, which could increase the likeliness of an accident on the premises or property damage.

To keep a vacant home properly insured the definition of vacancy and unoccupancy can vary from policy to policy. Some insurers may not pay claims if a home is vacant for 60 days or more. Some policies might automatically shift to a different amount of coverage (e.g. liability insurance only) after a specific number of days unoccupied.

Many homeowners’ policies have a "vacancy clause" that can be triggered if the homeowner is gone for an extended period of time and some or all of their coverage may not apply in the event of a loss. If your home will be vacant or unoccupied for a long period of time, talk to your insurance agent to learn how they define vacancy and unoccupancy, and whether the company will pay claims if a house is unoccupied.

Many insurance companies offer an endorsement that will provide coverage for a dwelling that is unoccupied for an extended period of time. Vacancy policies can also be purchased for different term lengths to cover a few months to a year, depending on your need.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.